Forfeited shares become the property of the company only for disposal and these may be resold at a discount, but the amount of discount cannot exceed the actual amount forfeited on those shares. Forfeited shares, however, shall never become the assets of the company. … The company may also cancel the forfeited shares.
What is the procedure for forfeiture of shares?
The notice must provide the shareholder with a minimum of 14 days to make the payment due, or his shares will be forfeited. Even after such notice if the shareholder does not pay, then the shares will be canceled. When the said shares are forfeited the shareholder ceases to be a member of the company.
What is called for in forfeiture of shares?
Forfeiture of shares is referred to as the situation when the allotted shares are cancelled by the issuing company due to non-payment of the subscription amount as requested by the issuing company from the shareholder. … Some shareholders might fail to pay instalments, viz., allocation of money or call money.
Is a forfeiture a crime?
Criminal forfeiture is an action brought as a part of the criminal prosecution of a defendant. It is an in personam (against the person) action and requires that the government indict (charge) the property used or derived from the crime along with the defendant.
What is meant by forfeiture?
Forfeiture is the loss of any property without compensation as a result of defaulting on contractual obligations, or as a penalty for illegal conduct. … When mandated by law, as a punishment for illegal activity or prohibited activities, forfeiture proceedings may be either criminal or civil.
What is the difference between share and stock?
A stock is a collection of something or a collection of shares. Shares are a part of something bigger i.e. the stocks. Shares represent the proportion of ownership in the company while stock is a simple aggregation of shares in a company. Shares are issued at par, discount, or at a premium.
Can forfeited shares be Cancelled?
Forfeited shares are held by the company and can then be sold, re-allotted, cancelled or otherwise disposed of as the directors think fit. … At any time before the company disposes of or cancels forfeited shares, the directors may decide to cancel the forfeiture on payment of all calls and interest due on the shares.
What is forfeited amount?
In case the transfer of assets is done within the agreement between seller & buyer, then will the advance money taken by seller in previous FY be termed as forfeited amount.
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 type of account is forfeited shares?
When Forfeiture of shares Issued at Par
The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.
When shares are forfeited share capital account is?
When shares are forfeited, share capital account is debited. Explanation: Share Capital Account represents the liability of the company as it is the amount that is borrowed from the public. Therefore, at the time of forfeiture of shares, it is debited with a called-up amount.