1. In case of the forfeited shares were originally issued at par or at premium, then these shares can be reissued with the maximum discount = amount forfeited on the re-issued share.
There is a cap on the rate of discount. A company cannot issue any shares at more than 10% discount.
Here is your answer. The Re-issue price of forfeited shares must be at least equal to the difference between the paid up value of Re-issued Shares and the Amount Forfeited on Re-issue Shares. In other words, Re-issue price must not be less than the amount unpaid on Forfeited Shares. Regards.
But the maximum permissible discount on reissue of shares will be equal to the amount forfeited plus the amount of discount initially allowed on these shares at the time of their original issue.
Explanation: According to the companies act 2013, a company can issue shares @ a min price of 1 rs.
The part of the gain on forfeiture which pertains to re-issued shares is transferred to capital reserve account. D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share.
If a share is reissued at a loss, on reissue Bank is debited with cash received, Forfeited Shares Account is debited with loss suffered (or discount allowed) and Share Capital Account is credited will the total of the two amounts which is the paid up value of reissued shares.
How do you find the maximum permissible discount?
In case of the forfeited shares were originally issued at discount, then these forfeited shares can be reissued with the maximum discount equal = amount forfeited on the re-issued share + the discount allowed at the time of original issue.
What are discount received?
A discount allowed is when the seller of goods or services grants a payment discount to a buyer. … A discount received is the reverse situation, where the buyer of goods or services is granted a discount by the seller. The examples just noted for a discount allowed also apply to a discount received.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date.
A forfeited share is a share in a publicly-traded company that the owner loses (or forfeits) by neglecting to live up to any number of purchase requirements.
On passing the resolution for allotment of shares, the allotment of shares must be done within 60 days of receiving the application money for the same. File the forms with ROC: The company must file the Form PAS -3, within 30 days from the allotment of the shares with the Registrar of Companies.