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Forfeiture of shares means the confiscation of the shares of a shareholder by way of penalty for non-payment. Usually shares are issued fully paid by a company. In other words, 'entire money due’ is collected at the time of application made for share allotment. But this is not always the case. Frequently, an applicant only needs to make part payment along for the application. The outstanding money is paid later. This is called ‘Call Money’ and/or ‘Allotment Money’ as the case may be. This is to be paid within the time period (usually 2 months or so for each stage). If the money is not paid, the company may forfeit the shares (along with the money received till that time) and re-issue the same later.A company can therefore forfeit shares if the persons who have applied for shares in the company do not pay the balance due on the shares within the stipulated time period as long as the Articles of association provide for this. (Note, there is no statutory right for the forfeiture of shares).It is critical that the company adheres to the forfeiture procedure as agreed in its Articles. If the correct procedure is used, a shareholder is liable to repay the nominal value of each of his shares. The proceedings of forfeiture are of a penal nature, thus the procedure as agreed in the company Articles must be followed exactly; otherwise the court may declare the forfeiture void.This Pack contains all required documents and forms for the forfeiture of company shares from any shareholder. |
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Suitable for any UK limited company;
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For the forfeiture of any shares;
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Extensive explanatory notes guide you through;
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Documents drawn in plain English. |
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