Procedure For Forfeiture of Shares

Procedure-for-Forfeiture-of-Shares


Regulation 28 of Table – F of Schedule – I provides that if a member fails to pay any call, or instalment of a call, on the day appointed for payment thereof, the Board of directors of the company may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.

Regulation 30 of Table – F of Schedule – I provides that if the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may, at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect.

Procedure For Forfeiture of Shares

1.   If a member fails to pay any call, or instalment of a call, on the day appointed for payment thereof, the Board may, at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.

2.   The board or committee thereof shall pass a resolution authorizing the forfeiture of share and issue of notice for this purpose.

3.      The notice aforesaid shall:

·   name a further day (not being earlier than the expiry of fourteen days from the date of service of the notice) on or before which the payment required by the notice is to be made; and

·     state that, in the event of non-payment on or before the day so named, the shares in respect of which the call was made will be liable to be forfeited.

4.        The notice must:

·   specify clearly the amount payable on account of unpaid call money as well as interest accrued, if any, and other expenses.

·     mention the day on or before which the amount specified ought to be paid, not be earlier than 14 days from the date of service of the notice.

·     contain an unambiguous statement to the effect that in the event of failure to pay the specified amount latest on the appointed day, the shares in respect of which the amount remains unpaid would be liable to be forfeited.

5.       The notice of forfeiture as contemplated in regulation 28 of Table – F of Schedule – I must be served in accordance with the provisions of section 20 of the Companies Act 2013.

6.    If the call money is not paid in response to such notice threatening forfeiture, the company may, at any time thereafter, before the payment required by the notice has been made, forfeit the shares by a resolution of the Board to that effect.

7.     Publish a notice of forfeiture in newspapers so that the members of the public are made aware of the forfeiture and cautioned not to deal in the forfeited shares.

8.         Inform the forfeiture of the shares to the concerned shareholders by registered post.

9.    Regulation 33 of Table – F of Schedule – I provides for a verified declaration in writing to be issued under the signature of a director, manager or secretary of the company that a share in the company has been duly forfeited on a date stated in the declaration. The declaration so made shall be conclusive evidence of the facts stated therein as against all persons claiming to be entitled to the shares forfeited.

10.    The fact of the forfeiture will be entered in the Register of Members and the name of the concerned shareholder as a member of the company will be deleted from the register.

11.   In case of listed company, notify the Stock Exchange at which the securities of the Company are listed about such forfeiture of shares.
Previous
Next Post »