Question

Assertion (A): Forfeited shares may be reissued by the company at par, at premium or at discount.

Reason (R): Reissue of forfeited shares is not an issue of shares but is selling the shares that were issued earlier and were cancelled by the company.

In the context of above two statements, which of the following is correct?

Options

• Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• Only Assertion (A) is correct.

• Both Assertion (A) and Reason (R) are not correct.

Answer 1

Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Explanation:

Forfeited shares can be reissued at par, at premium or at discount. Reissue is not a fresh issue of shares; it is a resale of shares that were earlier issued and subsequently forfeited.