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If a shareholder fails to pay the due amount of allotment or any call on shares
issued by the company, the Board of directors may decide to cancel
his/her membership of the company. With the cancellation, the defaulting
shareholder also loses the amount paid by him/her on such shares.
Thus when a shareholder is deprived of his/her membership due to non payment
of calls, it is known as forfeiture of shares.
when on non payment of money called on shares, the shares of a holder are forfeited , it
is called forfeiture... it is a penalising action... law provides the guidelines for carrying
out this procedure........ whereas surrender is an intentional act of the holder wen he
accepts that he cant pay the called money n hence wants to give up his holding..
law doesnt provide any guidelines for this...
if any shareholder fails to pay the amount due on allotment or on any call withinthe
specificed period, the derictors may cancel his share. this is called foreiture of shares .
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.