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REDEMPTION OF PREFERENCE SHARES

Accountancy

If shares are not fully paid up, company will redeem shares only when it is fully paid up but while forfeiting the shares they cancel it instead of reissuing since the redemption due in near future.......why does the same forfeiting concept does not apply when the shares are not fully paid up??


GOKULA LAKSHMI

GOKULA LAKSHMI

CFA L1

20K+

18-Mar-21 16:52

282

Answers (2)

Best Answer

It may so happen that company itself has not called up part money and hence, shares are not fully paid up. So, law says all calls must be made up and shares fully paid up before redemption. In case of forfeiture, it's the shareholder's default and hence shares are forfeited and cancelled.


Sahibdeep Singh

Sahibdeep Singh

CA Inter

14K+

18-Mar-21 17:23

Forfeiting happens when the shares are not paid up fully.


CA Suraj Lakhotia

CA Suraj Lakhotia

Admin

18-Mar-21 17:10

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