Page 169 - ISCDEBK-12

Joint Stock Company—Issue of Shares 7.5

• Calls-in-Arrears is the amount not yet received by the company against the call or calls demanded.
Calls not received by the company is transferred to Calls-in-Arrears Account.
• Calls-in-Advance is the amount received by the company from shareholders against the calls not yet
made. Calls-in-Advance is shown as Other Current Liability.
• Interest on Calls: Interest on Calls-in-Arrears may be collected by the Company from the shareholders, if
its Articles of Association so provides. If the company has adopted ‘Table F’ of the Companies Act, 2013,
then it can charge interest @ 10% p.a. from the due date to the date of actual payment.
Interest may be paid on Calls-in-Advance if its Articles of Association so provides. If the company has
adopted ‘Table F’ of the Companies Act, 2013 then it is required to pay interest @ 12% p.a. from the
date of receipt to the due date.
• Forfeiture of shares means cancellation of shares and forfeiting the amount received against these
shares. Forfeiture of shares takes place when a shareholder fails to pay the calls made.
• Journal Entry for forfeiture of shares:
Share Capital A/c ...Dr. [With the amount called-up on shares forfeited]
To Forfeited Shares A/c [With the amount already received less premium]
To Calls-in-Arrears A/c [With the amount due but not paid on allotment and Calls]
Securities Premium Reserve Account—How dealt when shares are forfeited. In case Securities Premium Reserve
Account has been credited and also it has been received: Securities Premium Reserve Account is not debited
because of the restrictions imposed by Section 52(2) of the Companies Act, 2013 as to utilisation.
In case Securities Premium Reserve Account has been credited but the amount has not been received:
Securities Premium Reserve Account is debited because the amount has not been received and therefore,
Section 52(2) of the Companies Act, 2013 does not apply.
• Reissue of Shares: Forfeited shares may be reissued by the company at par, at premium or at discount.
When such shares are reissued at a discount, the amount of discount allowed per share must not exceed
the amount forfeited on such a share in respect of capital (amount received per share minus any premium
received thereon).
Regarding Reissue of Forfeited Shares, Always Remember:
1. Discount on Reissue cannot exceed the forfeited amount.
2. If the Discount on reissue is less than the amount forfeited, the surplus (i.e., gain on reissue of shares)
is transferred to Capital Reserve.
3. When only a part of the forfeited shares is reissued then the gain on reissue of such shares is
transferred to Capital Reserve.
4. The forfeited amount on shares not yet reissued is shown in the Balance Sheet as an addition to the
share capital.
5. When the shares are reissued at Discount, such discount is debited to Forfeited Shares Account.
6. If the shares are reissued at a price which is more than the nominal (face) value of the shares, the
excess amount is credited to Securities Premium Reserve Account.
7. In case the forfeited shares are reissued at a price higher than the paid-up value, the excess of issue
price over paid-up value is credited to ‘Securities Premium Reserve Account’.

• In Pro rata Allotment: When shares are reissued at a premium, excess money received on application is
first be adjusted towards Share Capital and the balance, if any, is utilised towards Securities Premium Reserve.