Forfeiture of Shares

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....iples for forfeiture of both equity and preference shares arising from non-payment of calls. Definitions The following terms are used in this standard with the meaning specified: "Act" means the Companies Act, 1956 (1 of 1956), or any statutory modification or re-enactment thereof. "Articles" means the articles of association of a company. "Board" means the Board of directors of a company. "Call" means a demand made by the company on members for payment of an amount due on shares in respect of nominal value or premium or both. Unless the context otherwise requires, words and expressions used herein and not defined shall have the meaning respectively assigned to them under the Act. Secretarial Standards 1. Authority 1.1 The Article....

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....e effected. 2.4 Forfeiture on non-payment - If the amount payable specified in the notice was not paid within the stipulated date, any share in respect of which the notice has been given may at any time thereafter be forfeited. Any entitlement of the defaulting member for dividends on his partly paid up shares may be adjusted against his dues on calls. 3. Requirements of Forfeiture 3.1 The Board at a duly convened meeting should approve the forfeiture and authorize any director or manager or the secretary to make a declaration of such forfeiture - An authenticated list of shares to be forfeited together with the names of shareholders thereof should be placed before the Board for this purpose. 3.2 The date of approval by the Board is th....

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....toring the name of the member on the register of members. 5. Effect of Forfeiture 5.1 A person whose shares have been forfeited would cease to be a member of the company, in respect of those shares. 5.2 A person whose shares have been forfeited would notwithstanding the forfeiture, remain liable to pay to the company all moneys, which at the date of forfeiture were payable by him to the company in respect of the shares - The liability of the defaulting member shall not cease till the company receives the full payment which is due in respect of shares. The name of the defaulting member will be placed as a past member on the list of contributories if a winding up of the company commences within one year of the date of forfeiture. 6. Re-is....