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Effects of Forfeiture of Shares

Due to forfeiture of shares, the rights and liabilities of the shareholders are affected by the following:


(1) The shareholder does not have ownership of the shares.

(2) The shareholder ceases to be a member of the company in respect of the forfeited shares.

(3) He has no right to receive dividend in future or any other right.

(4) The shareholder is liable only for the amount which he was to pay on the date of forfeiture of the shares i.e. he shall not be liable for future demands.

(5) If the company is dissolved within one year of the forfeiture, then he is liable in the same way as the payees of the ‘B’ list of the company are liable.

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