What do u mean by forfeiture of shares?

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.

What do you mean by forfeiture?

1 : something forfeited or subject to being forfeited (as for a crime, offense, or neglect of duty) : penalty They were required to pay a forfeit. 2 : forfeiture especially of civil rights. 3a : something deposited (as for making a mistake in a game) and then redeemed on payment of a fine.

What is forfeiture of shares Class 12?

Forfeiture of shares means cancellation of shares and seizure of the amount received from the defaulting shareholders, whose shares have been forfeited. Upon forfeiture, the name of original shareholder must be removed from the register of members.

What do you mean by forfeiture and reissue of shares?

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’.

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Why share are forfeited?

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.

What is the process of forfeiture?

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 instalments of the issue price of his shares within a certain period of time after they fall due.

What is forfeiture of tax refund?

(A) Forfeiture of Refund.- A refund check or warrant issued in accordance with the pertinent provisions of this Code, which shall remain unclaimed or uncashed within five (5) years from the date the said warrant or check was mailed or delivered, shall be forfeited in favor of the Government and the amount thereof shall …

How do you calculate forfeiture of shares?

ADVERTISEMENTS: In order to calculate the amount to be debited to share capital account the folk formulae will help to understand: Number of shares forfeited x Amount per share called up. Here number of forfeited shares means those shares which have been declared forfeited the company.

What is forfeiture of share when can a share be forfeited?

But if the shareholder fails to pay any of the calls (one or more) on the authorization of the board of Directors, the said shares can be forfeited. Forfeiture essentially means cancellation. Before such forfeiture is done a notice must be given to the shareholder.

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What is forfeiture of shares how does it differ 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.

What entries are made for forfeiture of shares?

When Forfeiture of shares Issued at Par

The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.

When all forfeited shares are not reissued?

ADVERTISEMENTS: Accounting Entries Regarding Reissue of Forfeited Shares! The forfeited shares can be reissued by the company at any price. But in no case, the amount collected on the reissue of such shares plus the amount already forfeited be less than the amount credited as paid upon reissue of shares.

When shares are forfeited share capital account is?

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.