and pro- rata Allotment:-
When shares are
over subscribed, it is not possible for company to satisfy all the applicants.
Allotment of shares is done at the discretion of company. Allotment basis can
be any one of the following:-
(a)Company may allot full shares to some and
(b) Allotment of shares on Pro-rata basis.
Allotment:- Means allotment of shares in proportion of shares
applied for. Applicants are
informed about allotment procedure through an advertisement in leading
Arrears: Sometimes share holders fail to pay the amount due
on allotment or calls. The total unpaid amount on one or more installments is
known as call-in-arrear or unpaid calls. Such amount represents uncollected
amount of capital from shareholders. Call-in-arrear
is deducted from called-up capital to reach at paid-up value of share capital. Generally Articles of
Association empower the directors to charge interest at stipulated rate on
according to Table F of articles of
association, Interest at the rate of 10% per annum is charged on unpaid calls
for the period started from the due date and end on when actual payment is
made. However, directors have
authority to waive the application of this rule in individual cases at their
Advance:- Sometime, shareholders pay in advance for calls
which have not been made. This
amount may be with application money, allotment money, first call etc. Calls in advance is shown as a
separate item on the liability side of the balance sheet under the head ‘other
current liability’. As per table F of articles of association,
INTEREST on calls in advance is paid @ 12% p.a.
of shares:- The Article of a company usually authorize the
directors to forfeit shares of a member on account of non-payment of a call or
interest thereon after serving him a prior notice as prescribed by the
articles. Premium money received
is never forfeited.
of forfeited shares:- Forfeited shares can be re-issued at any
price so long as the total amount received (from the original allottee and the
second purchaser) for those shares is not less than the amount in arrears on those
shares. Loss on re-issue can
not exceed the forfeited amount. If
the loss on re-issue is less than the forfeited amount, the surplus should be
transferred to capital reserve. The
forfeited amount on shares not yet re-issued should be shown in the balance
sheet as an addition to the share capital. When the shares are re-issued at loss
then such loss is debited to ‘Forfeited shares account’. If the shares are re-issued at a price which is more than
the face value of the shares, the excess amount will be credited to ‘securities
premium account’. When shares
originally issued at a discount are re-issued at a loss, the loss to the extent
of original discount is debited to Discount on issue of shares Account and the
balance loss is debited to forfeited shares Account.
SHARES FOR CONSIDERATION OTHER THAN CASH:- A company
may issue shares in a direct exchange for land, building or other assets.
Shares may also be issued in payment for services rendered by promoters,
lawyers in the formation of the company. In the balance sheet, these shares
should be shown separately. Within
one month of allotment, the company must provide before the registration.
Demo Videos for Accounts (CA/CMA/CS/B.Com/11-12th) by CA/CMA Santosh Kumar Sir: https://www.conceptonlineclasses.com/demovideos
Visit Website: https://www.conceptonlineclasses.com/