Corporate Accounting Issue, Forfeiture & Reissue of Shares Commerce YouTube Lecture Handouts

Get unlimited access to the best preparation resource for competitive exams : get questions, notes, tests, video lectures and more- for all subjects of your exam.

Corporate Accounting Issue, Forfeiture & Reissue of Shares Commerce

Issue, Forfeiture & Reissue of Shares

  • Company: An organization made up of individuals who are referred to as “shareholders” because they own shares in the company, and which can act as legal entity with regards to its business through a board of directors.
  • Share: A share is a fraction of company՚s capital that serves as the basis for ownership. According to The Companies Act, 2013 shares are divided into two categories i.e.. , equity shares and preference shares. Preference shares come in a variety of shapes and sizes depending on their rights that come with them.
  • A company՚s capital is raised by issuing shares to either a small number of people through private placements or to the general public for subscription. As a result, the issuance of shares is essential to a company՚s capital. Shares can be issued for cash or for something other than cash with the former being the more usual option. When a firm purchases of business or some asset/assets, the vendors have agreed to receive payment in the form of fully paid shares of the firm, shares are set to be issued for consideration other than cash.

Provisions Regarding Related Aspects

Provisions Regarding Related Aspects

Liquidation of Companies

Liquidation of Companies

Liquidation is the process through which a debt-ridden firm shuts down operations and sells its assets to pay off its debts and other commitments. A corporation is liquidated when it is determined that it is unable to continue operating.

Provisions Regarding Liquidation

  • Turning assets into cash
  • The liquidator
  • Process of liquidation

Acquisition, Merger, Amalgamation & Reconstruction of Companies

  • When two or more corporations merge to form a third company, or when one is absorbed into or mixed with another, this is known as amalgamation. As a result, absorptions are included in amalgamation. The term “absorption” refers to when a dominant corporation takes control of a weaker one.
  • The new company is formed with all of the member firms՚ property, rights, and powers, as well as all of its liabilities and obligations.

Provisions Regarding Amalgamation

Types of Amalgamation

  • Amalgamation in the nature of merger
  • Amalgamation in the nature of Purchase

Methods of Accounting for Amalgamation

  • The pooling of interest՚s method
  • The purchase method