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Forfeiture of Shares Video Lecture | Accounting for CA Foundation

FAQs on Forfeiture of Shares Video Lecture - Accounting for CA Foundation

1. What is meant by forfeiture of shares?

Ans. Forfeiture of shares refers to the process by which a company cancels or re-acquires the shares of a shareholder who fails to pay the due amount on those shares. This can happen when a shareholder fails to pay the call money or any other money due on the shares within the specified time period.

2. What are the reasons for the forfeiture of shares?

Ans. The main reasons for the forfeiture of shares include non-payment of call money, non-payment of allotment money, non-payment of any money due on the shares, or any other breach of the terms and conditions of shareholding as mentioned in the articles of association of the company.

3. What happens to the forfeited shares after forfeiture?

Ans. After the forfeiture of shares, the company can either cancel the shares or re-issue them to new shareholders. If the company decides to cancel the forfeited shares, they are extinguished or no longer in existence. However, if the company chooses to re-issue the shares, they can be offered to new shareholders through the process of re-issuance.

4. What rights does a shareholder lose in case of forfeiture of shares?

Ans. When shares are forfeited, the shareholder loses all the rights associated with those shares, including voting rights, right to receive dividends, and any other benefits or privileges attached to the shares. The shareholder also loses the right to participate in the decision-making process of the company.

5. Can a shareholder reclaim the forfeited shares?

Ans. In certain cases, a shareholder may have the opportunity to reclaim the forfeited shares. This can happen if the shareholder pays the due amount on the shares, along with any additional charges or penalties, within a specified period of time. However, the decision to allow the reclamation of forfeited shares lies with the company's board of directors and is subject to their discretion and the provisions mentioned in the articles of association.

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Oct 06, 2025 Last updated

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