If a Company Has Created a Forfeited Shares Reserve,this Means

question 14

Multiple Choice

If a company has created a forfeited shares reserve,this means that:

• A) The company is not a member of the Australian Stock Exchange and its constitution does not require it to refund amounts already paid by defaulting investors.
• B) The company is expecting that the amounts unpaid will be collected in the next period.
• C) The company is a member of the Australian Stock Exchange and is required to refund amounts already paid by defaulting investors.
• D) The company is holding the amounts already paid by defaulting investors in trust in order to repay them on the request of the investor.
• E) None of the given answers.

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Definitions:

Preferred Stock Conversion

The process by which holders of preferred shares can convert their stocks into a predetermined number of common shares, often under specific conditions.

Dividends in Arrears

Dividends on cumulative preferred stock that have not been declared or paid for the current or previous periods, accumulating until they are paid out.

Cumulative Preferred Stock

A type of preferred stock that entitles its holders to receive dividends that have been missed in previous payments before any dividends can be issued to other types of shareholders.

Participating Preferred Stock

A type of preferred stock that offers dividends that exceed the fixed amount if the company's profits reach predetermined targets.