Re-issue of shares

 Re-issue of shares

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 Welcome back!!!!!

Do you want to know about re-issue of shares? If Yes!!!! Then this article is for you...This article will surely help you to build your understanding into shares.

Sounds good???......Great!!!! Now listen carefully……

Re-issue of shares: 

In the previous article “forfeiture of shares”, we have learnt how company forfeits its shares.                Now if we are talking about Re-issue, then it means re-issue of the forfeited shares by the company to the public. 

It simply means due to forfeiture, the forfeited shares become the property of the company and the company has got the right to re-issue it to public. Company can re-issue it at par, at discount or at premium.
Some Important things to be remember at the time of re-issue:

1) If company re-issue the forfeited shares which were partly called up before the forfeiture, then the Share Capital Account will be credited with that partly called up amount.

2) If shares are re-issued as fully paid up then face value of share will be credited into Share capital account.

3) If shares are re-issued at discount, then maximum discount in that case will not be more than the amount forfeited earlier on that shares.

4) Balance of Share Forfeiture Account will be transferred into Capital Reserve because it will be the capital gain for the company.  

If all the shares are not re-issued : then we should calculate the proportionate forfeited amount on shares and will apply the following formula to calculate gain on re-issue of shares.

Amount to be transferred into capital reserve will be = (total amount forfeited/ no of shares X no of shares re-issued) – amount with which forfeiture account is debited (in case of re-issue of discount)  

Entries for re-issue :         

1) When re-issued at par      

Date	Particulars	Amount	Amount
	Bank    (amount received actually)                                                                       dr.     To Share Capital (amount paid up) (being shares re-issued at par)

2) When re-issued at premium          

Date	Particulars	Amount	Amount
	Bank    (amount actually received)                                                                      dr.                                                       To Share Capital (amount paid up)     To Securities Premium Reserve (excess amount over the amount paid up) (being shares reissued at premium)

3) When re-issued at discount

Date	Particulars	Amount	Amount
	Bank    (amount actually received)                                                                     dr.               Share Forfeiture                                                                                                   dr.                                                     To Share Capital  (amount paid up) (being shares re-issued at discount)

 4) Balance of forfeiture account transferred to capital reserve

Date	Particulars	Amount	Amount
	Share forfeiture                                                                                                 dr.                                      To Capital Reserve (being amount transferred to capital reserve)

Hope you all have understood about forfeiture of shares now. I hope this article has helped you in your concept clarity. If it is true then give your feedback in comment section or write me at shivamsir009@gmail.com

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Thank you

Shivam garg

Team Go Commerce

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