When can a company forfeit shares of shareholders?

When can a company forfeit shares?

A company can forfeit shares only when the Articles of Association of the company contain a provision for share forfeiture. A shareholder subscribing to the shares of a company owes the subscription price of the shares to the company. The company may call upon the shareholder to pay the price in instalments.

When can a company forfeit shares answer in one sentence?

Ans: When the shareholder fails to pay the full amount of share which he agreed to pay in installments, the company can forfeit his shares. 6.

Why do companies forfeit their shares?

The main reason for forfeiture is where a call payment has been requested by the company on unpaid (or partly paid) shares and the shareholder has failed to pay the amount due. … Fully paid shares that are subject to a restriction on the sale or transfer for a set amount of time.

Can forfeited shares be reissued?

Forfeited shares are available with the company for sale. … A company can re-issue these shares at any price but the total amount received on these shares should not be less than the amount in arrears on these shares. Here, total amount refers to the amount received from the original allottee and the second purchaser.

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Can fully paid shares be forfeited?

Fully paid-up shares are those shares on which the shareholders’ have paid the entire amount due from such shares. Forfeiture of shares is done when a shareholder fails to pay the amount when called by the company. ​Therefore, what we can say is that fully paid-up shares cannot be forfeited.

What happens when shares are forfeited?

What Is a Forfeited Share? … When a share is forfeited, the shareholder no longer owes any remaining balance and surrenders any potential capital gain on the shares, which automatically revert back to the ownership of the issuing company.

What is forfeiture of shares in one sentence?

What is forfeiture of shares? Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or instalments of the issue price of his shares within a certain period of time after they fall due.

What is transfer of shares answer in one sentence?

Transfer of share means the transfer of ownership of shares from one person to another. In other words, a shareholder can transfer the share to another shareholder. Transfer of shares takes place when the shareholder wants to sell his shares or give as a gift to another person.

Can unpaid shares be transferred?

Yes, both unpaid shares and partly paid shares can usually be transferred to a new shareholder (subject to the company’s Articles of Association).

How can a private company cancel a share?

There are three steps:

  1. Check the company’s articles do not limit or prohibit buy-backs;
  2. The articles of association must expressly limit or prohibit buy backs;
  3. Gain approval by an ordinary shareholder’s resolution for the contract;
  4. The company makes an off-market purchase of its own shares.
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Can allotted shares be Cancelled?

Can a company cancel the allotment of partially paid shares. Return of allotment is filed now the shareholder is not willing to take all the shares. …