Question 26. Explain the forfeiture of share ?
Answer 26. FORFEITURE OF SHARE : forfeiture of share means cancellation of shares. As it may happen that some of the shareholders may fail to pay one or more installment, in such a cases, the company has two options, either the company my suit claim against the defaulting shareholder for the recovery of the unpaid calls or it may forfeit the shares. Suing of the defaulting shareholders in the court of law for recovery of unpaid calls is a very time consuming and expensive method, hence the board of directors is empowered by the Article for the forfeiture of shares as per rules given in it. If no provision exists for the forfeiture of shares in the Article in such case the provision in Table 4 of Companies Act 2013 becomes applicable for the same.
PROCEDURE OF FORFEITURE :
1. TO MAKE THE LIST
2. TO SEND NOTICE
3. TO MAKD LIST OF UNPAID SHAREHOLDERS
4. LAST WARNING
5. TO TAKE ACTION
6. TO PASS A RESOLUTION FOR FORFEITURE
7. TO DEMAND SHARE CERTIFICATE
8. TO TERMINATE THEIR NAME
9. TO TRANSFER OF AMOUNT
10. WRITTEN STATEMENT PUBLISHED.