- As per Articles: In the Articles of the company an authorization for forfeiture of share could be there. It should be to the benefit of the company.
- Good faith: The directors of the company must exercise the power to forfeit share in goods faith.
- Proper notice: Before forfeiting the shares, notice must be served to the company on the defaulting shareholders in account of the unpaid call along with the interest which has been accrued.
- A clear notice of 14 days must be given for the payment of the unpaid call.
- If the payments of the amount are not made within the period mentioned in the notice, the share against the call will be in the position to be forfeited.
- Resolution of the Board: The directors have the power to pass resolution for forfeiting shares, if the defaulting shareholder is unable to pay the amount due within the specified time. The forfeiture becomes invalid if resolution is not passed.
What are the conditions to be satisfied for forfeiture?
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