Core concepts
- 01Share capital: Authorised, Issued, Subscribed, Called-up, Paid-up.
- 02Issue at par, premium (Sec 52), or discount (only sweat equity under Sec 53).
- 03Stages: Application, Allotment, Calls — money received in instalments.
- 04Calls in Arrears: unpaid called-up amount; Calls in Advance: paid before call.
- 05Forfeiture: cancellation for non-payment; re-issue at any price (discount ≤ forfeited amount).
Flowchart
Application Money | v Allotment (pro-rata if over-subscribed) | v Calls (1st, 2nd, Final) | +--> Default --> Forfeiture --> Re-issue
Exam-critical pointers
- ⭐Securities Premium uses (Sec 52): bonus issue, write-off preliminary expenses, premium on redemption, buy-back.
- ⭐If pro-rata allotment, excess application money adjusts towards allotment then calls.
- ⭐Re-issue at discount: max discount = forfeited amount per share.
- ⭐Companies Act 2013 prohibits issue at discount (except sweat equity).
Make it click