Question

Problem 8: Harsha Co Ltd. (Shares issued at premium where the premium is included in the allotment stage, Calls-in Arrears, Forfeiture and Re-issue of Shares) Journal Entries: in the Books of Harsha Co Ltd

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Answer 1

Forfeiture of share means the cancellation of the shares for non-payment of calls due. But, the company can forfeit shares only if the Article of Association of the company allow forfeiture. If any shareholder is not able to pay the amount of call, the company may exercise the power to forfeit his shares on which he is unable to pay the amount of call

Forfeiture of Share

As we know, a company can forfeit shares on non-payment of the number of calls. The company before forfeiture must first give clear 14 days’ notice to the defaulting shareholder that he shall pay the due amount along with the interest.

If not paid by the specified date, the shares shall be forfeited. If the shareholder still does not pay, the company may forfeit the shares by passing an appropriate resolution

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