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Question
Which of the following securities can be forfeited for non-payment of allotment or call money?
(I) Equity Shares
(II) Equity Shares, Preference Shares
(III) Preference Shares, Equity Shares & Debentures
(IV) Debentures
Select the correct answer from the options given below -
Which of the following securities can be forfeited for non-payment of allotment or call money?
(I) Equity Shares
(II) Equity Shares, Preference Shares
(III) Preference Shares, Equity Shares & Debentures
(IV) Debentures
Select the correct answer from the options given below -
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Solution
The correct option is D (II) only
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 installments of the issue price of his shares within a certain period of time after they fall due. In other words, when the shareholder fails to pay the full amount of share which he agreed to pay in installments the company can cancel his shares. Only equity and preference shares can be forfeited for non-payment and under the provisions of Companies Act, 2013 debentures cannot be forfeited by company.
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 installments of the issue price of his shares within a certain period of time after they fall due. In other words, when the shareholder fails to pay the full amount of share which he agreed to pay in installments the company can cancel his shares. Only equity and preference shares can be forfeited for non-payment and under the provisions of Companies Act, 2013 debentures cannot be forfeited by company.
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