Re-issue of Forfeited Shares

The auditor should :

1.  ascertain that the Board of Directors has the authority under the Articles to re-issue forfeited shares;
2.  refer to the resolution of the Board of Directors, reallotting forfeited shares;
3.  vouch the amounts collected from person to whom the shares have been allotted and verify the entries recorded from reallotment and see that the total amount received on the share, including that received prior to forfeiture, is not less than the par value; and
4.  verify that computation of the amount of surplus resulting on the reissue of shares credited to the Capital Reserve Account; and
5.  where partly paid shares are forfeited for non-payment of call, and are re-issued as fully paid, the re-issue is treated as an allotment at a discount Biochemical and Synthetic Products Ltd. v. Registrar of Companies [(1962) 32 Comp. Case 654]. In such a case the provisions of Section 79 would require compliance.