Question

Savi Ltd. forfeited 50 shares of ₹100 each issued at a premium of 10%, on which allotment money of ₹30 per share (including premium) and first and final call of ₹40 per share were not received.

What is the minimum amount per share at which the company can reissue these shares?

Answer 1

The maximum discount that the company can give at the reissue of forfeited shares = The amount received on the first issue of those shares

Amount received on first issue of those shares = 50 × (100 − (20 + 40)) = 50 × 40 = ₹2,000

The maximum discount that can be allowed on reissue = ₹2,000

Maximum discount per share will be = `(2,000)/50` = ₹40 per share

The minimum amount per share at which the company can reissue these share

= Face value − Maximum discount

= 100 − 40

= ₹60 per share