What are the two effects of forfeiture of shares?

(i) The name of the defaulting shareholder is removed from the register of members. It means he is no longer a shareholder of the company. (ii) The amount already paid by the defaulting shareholder is forfeited and such amount is transferred to Forfeited Shares Account.

What are the effect of forfeiture of shares?

– The liability of a person whose shares have been forfeited comes to an end when the company receives the payment in full of all such money in respect of shares forfeited. – A member is liable for unpaid calls even after the forfeiture of shares.

What is the effect of forfeiture of shares on shareholders?

Forfeiture is withdrawal of shares due to non-payment of any call by the shareholder or for any other ground as may be provided in the Articles. On forfeiture of shares the member loses the amount paid thereon and his interest in the ownership of the shares.

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What are the effects of forfeiture of shares Mcq?

Cessation of Membership: On forfeiture, a member ceases to be a member of a company and loses all membership rights. The member’s name is removed from the Register of Members. Liability of Member: A member is liable for unpaid calls even after forfeiture of shares.

What are the conditions of forfeiture of shares?

If a shareholder, who is called upon to pay any call fails to pay the amount, even after sending several reminders, the company may forfeit his shares. Forfeiture of shares results in a permanent reduction of the share capital.

What is forfeiture of shares explain?

Forfeiture of shares is referred to as the situation when the allotted shares are cancelled by the issuing company due to non-payment of the subscription amount as requested by the issuing company from the shareholder. … Their share will be forfeited, which means that the shareholder’s share will be cancelled.

What is forfeiture of shares when and how the shares of a company can be forfeited?

Forfeiture of Shares. Forfeiture of share means the cancellation of the shares for non-payment of calls due. … If any shareholder is not able to pay the amount of call, the company may exercise the power to forfeit his shares on which he is unable to pay the amount of call.

What is forfeiture of shares how is it different from surrender of shares?

Forfeiture of shares refers to the situation where the allotment of shares is cancelled for the shareholders due to non-payment of any installments. In contrast to that, surrender of shares takes place when shareholders return the shares to the company for cancellation.

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What is forfeiture in economics?

Forfeiture refers to a loss of any property, money, or assets without consideration or compensation in return. A forfeiture generally occurs due to default in complying with repayment obligations under a contract. It can also be used as a penalty for an illegal way of conducting business.

What is forfeiture of shares answer in one sentence?

When a shareholder fails to pay the call money or premium on the shares in spite of repeated reminders and warnings, the company forfeits the shares of such defaulters known as forfeiture of shares.

When forfeited shares are reissued the amount of discount allowed on these shares Cannot exceed?

Forfeited shares can be reissued as fully paid at a par, premium or discount. In this, it may be noted that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares at the time of initial issue.

When shares are forfeited the share capital account is debited with?

When shares are forfeited, share capital account is debited. Explanation: Share Capital Account represents the liability of the company as it is the amount that is borrowed from the public. Therefore, at the time of forfeiture of shares, it is debited with a called-up amount.

What is forfeiture of shares explain requirements of valid forfeiture and its consequences?

Definition: Forfeiture of Shares or Share forfeiture is a process in which the company’s directors annul (cancel) the rights of a shareholder, who has not paid the call money due on time when the company demands and, even after receiving the notice for such non-payment.

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