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Chapter 8 . Company Accounts—Accounting for Share Capital 8.5

• Securities Premium Reserve can be utilised for the purposes prescribed in Section 52(2) of the Companies
Act, 2013, which are:
(i) writing off preliminary expenses;
(ii) writing off expenses such as share issue expenses, commission, discount allowed on issue of Securities;
(iii) providing for the premium payable on redemption of debentures or Preference Shares;
(iv) in buying-back its own shares; or
(v) issuing fully paid bonus shares.
• Call is a demand by a company from the holders of partly paid shares to pay a further instalment towards full
nominal value.
• Calls-in-Arrears is the amount not yet received by the company against the call or calls demanded.
• Calls-in-Advance is the amount received by the company from its allottees against the calls not yet made.
Calls-in-Advance is shown as ‘Other Current Liabilities’ under the main head of ‘Current Liabilities’.
• 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.
Securities Premium — How dealt when shares are forfeited
In case where 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 Forfeited Shares: Forfeited Shares can be reissued and they may be reissued at a value lower
than its face value. But the discount on reissue of a share cannot be more than the forfeited amount of that share
credited to Forfeited Shares Account at the time of forfeiture.

Regarding Reissue of Forfeited Shares, always keep in mind that:
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
paid-up 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’.
• Private Placement of Shares: It refers to issue and allotment of shares to a selected group of persons. In
other words, an issue, which is not a public issue but offered to a selected group of persons, is called Private
Placement of Shares.
• Employees Stock Option Plan (ESOP): It is the plan for granting options to subscribe shares by employees
and employee directors.