What Is a Forfeited Share? … When a share is forfeited, the shareholder no longer owes any remaining balance and surrenders any potential capital gain on the shares, which automatically revert back to the ownership of the issuing company.
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.
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.
If applicants fail to pay the allotment amount and the shareholders fail to pay the call money, then the company can forfeit such shares. Forfeiture of shares is a process of withdrawing the shares allotted and seizing the amount already paid by the defaulters.
If shares are forfeited the membership of the shareholder stands cancelled and the shares become the property of the company. Thereafter, the company has an option of selling such forfeited shares. The sale of forfeited shares is called ‘reissue of shares’.
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.
Transfer of called up amount in respect of 500 forfeited equity shares from Equity Share Capital Account to Forfeited Shares Account. Transfer of amount not received in respect of forfeited shares to Forfeited Shares Account. Forfeited shares can be reissued.
When a shareholder fails to pay the allotment money or any subsequent calls, then the company informs the shareholder by giving him/her a proper notice. If after the notification, the shareholder still fails to pay the due money, then the company is allowed to forfeit the shares of such shareholders.
(a) Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or installment of the issue price of his shares within a certain period of time after they fall due.
The maximum amount of discount on reissue of forfeited shares is that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares on their original issue and that the discount allowed on re issue of forfeited shares should be debited to the share forfeited account.
What is forfeited amount?
More Definitions of Forfeited Amount
Forfeited Amount means an amount that has not vested under the Plan before the termination of the Plan.
How is forfeiture amount calculated?
Aggregate Forfeiture Rate: The aggregate forfeiture rate is simply the forfeited shares divided by the granted shares to show the percentage of shares forfeited out of the entire sample. Keep in mind that this number represents the total percentage of shares forfeiture over the entire life of the 2013 granted awards.
Balance of share forfeiture account (before re – issue of such shares) is shown in the balance sheet under the item .