Reissue of Forfeited Shares

Once shares are forfeited, they become the company's own property again, and the Board may reissue them to a new applicant — at par, at a premium, or at a discount — subject to one important restriction:

The discount allowed on the reissue of a forfeited share can never exceed the amount already forfeited (credited to the Share Forfeiture Account) in respect of that particular share.

Accounting treatment

On reissue, the Bank Account is debited with the amount actually received from the new allottee; the Share Forfeiture Account is debited with the discount allowed on reissue, if any; and the Equity Share Capital Account is credited with the amount that share is being made paid-up for (usually its full face value).

Transfer to Capital Reserve …