Forfeiture of Share Video Lecture | Principles and Practice of Accounting - CA Foundation

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FAQs on Forfeiture of Share Video Lecture - Principles and Practice of Accounting - CA Foundation

1. What is forfeiture of share?
Ans. Forfeiture of share refers to the process in which a company cancels the shares owned by a shareholder due to non-payment of the required amount. This can happen if a shareholder fails to pay the call money or any installments due on the shares.
2. What are the consequences of share forfeiture?
Ans. The consequences of share forfeiture include the cancellation of the shareholder's ownership rights in the company, loss of voting rights, and the company's ability to sell the forfeited shares to someone else. The shareholder also loses any dividends or other benefits associated with the forfeited shares.
3. Can a company forfeit shares without giving notice to the shareholder?
Ans. No, a company cannot forfeit shares without giving notice to the shareholder. As per the rules and regulations, a company must provide a written notice to the shareholder before proceeding with the forfeiture process. The notice should specify the amount due, the deadline for payment, and the consequences of non-payment.
4. Is there any way for a shareholder to avoid share forfeiture?
Ans. Yes, a shareholder can avoid share forfeiture by making the required payment within the specified deadline mentioned in the notice. If the shareholder pays the outstanding amount before the forfeiture process is completed, their shares will be reinstated, and they will retain their ownership rights in the company.
5. Can a company sell forfeited shares to recover the outstanding amount?
Ans. Yes, a company can sell forfeited shares to recover the outstanding amount from the shareholder. Once the shares are forfeited, the company has the right to sell them to a third party and use the proceeds to cover the unpaid amount. However, any surplus amount obtained from the sale must be returned to the shareholder after deducting the outstanding dues.
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