Question

Explain SEBI guidelines for forfeiture of share

Answer 1

There is a provision in Chapter VIII of  the SEBI (Disclosure and Investor Protection) Guidelines, 2000, which is reproduced herein  below: 

a) If the subscription money is proposed to be received in calls, the calls shall be structured in such a manner that the entire subscription money is called within 12 months from the date of allotment.

b) If the investor fails to pay call money within 12 months the subscription money already paid may be forfeited.

c) If the issue size is above Rs.500 crores and is subject to monitoring requirement as per Clause 8.17.1 of this Chapter, it shall not be necessary to call the entire subscription money within 12 months.