Follow my blog with Bloglovin

What is meant by ‘forfeiture of shares’? What are the essential conditions of a statutory forfeiture and what are the effects of forfeiture of shares? explain.

 In order to raise capital, the company makes solicitations on the shareholders. If any shareholder does not pay the calls made on his shares even after continuous notices, then the Board of Directors can forfeit such shares by passing a resolution. The Companies Act 2013 does not say anything regarding forfeiture of shares. Therefore, legally the company cannot forfeit the shares unless such provision has been made in the Articles of the Company. According to the Articles of Association of the company, forfeiture of shares is called ‘forfeiture of shares’ and the shares which are forfeited are called ‘forfeited shares’.

Leave a Comment