Question

how i can solve forfeiture of shares

Answer 1

If a shareholder fails to pay the due amount of allotment or any call on shares issued by the company, the Board of directors may decide to cancel his/her membership of the company. With the cancellation, the defaulting shareholder also loses the amount paid by him/her on such shares. Thus,when a shareholder is deprived of his/her membership due to non payment of calls, it is known as forfeiture of shares. The result of forfeiture of shares is : Cancellation of membership of the shareholder. Reduction of issued share Capital of the company. Let us take an example to make it more clear. S.K. Ltd. issued 100000 shares of Rs 10 each payable as Rs 2 on application, Rs 2 on allotment, Rs 3 on first call and Rs 3 on second and final call. Mr. Harish, the allottee of 100 shares, fails to pay the second and final call money made by the company. In this case if the Board of Directors decide to forfeit his shares, his membership will be cancelled and the amount of Rs 700 paid by him (on 100 shares Rs 2 on application, Rs 2 on allotment and Rs 3 on first call per share) will be forfeited. Now Mr. Harish will no longer be the member of the company and the issued capital of the company will be reduced by Rs 1000.
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