Forfeiture of Shares

Complete the sentence.

Company can forfeit only ______ paid shares.

Answer in one sentence.

When can a company forfeit shares?

Correct the underlined word and rewrite the following sentence.

Only fully paid up shares can be forfeited.

Explain the following term/concept.

Forfeiture of shares

Study the following case/situation and express your opinion.

Red Tubes Ltd. has made a demand on its shareholders to pay the balance unpaid amount of ₹ 20/- per share (having a face value of ₹ 100) held by them. The company has sent letters asking the shareholders to pay the money to its Bankers within the specified time.

1. Are the shareholders liable to pay ₹ 20 for the shares held by them?
2. Name the letter sent by the company to its shareholders asking them to pay ₹ 20/-
3. What happens if a shareholder fails to pay the money within the specified time?

Study the following case/situation and express your opinion.

X owns 100 shares while Y owns 500 shares of Red Tubes Ltd. The company has asked all its shareholders to pay the balance unpaid amount of ₹ 20. X pays the full money demanded by the company. Y, who is in a bad financial position is unable to pay any money.

1. Can the company forfeit the shares of Y?
2. Can the company forfeit the shares of X?
3. Can X transfer his shares?

Answer in brief.

What are the effects of forfeiture of shares?

Justify the following statement.

Board of Directors have the authority to forfeit shares.