What is the procedure for forfeiture?

Procedure for effecting forfeiture:

For the forfeiture of shares following procedures are followed:

1. There should be a clear authorization in the Articles of Association of the company for the forfeiture of shares.
2. Share must be forfeited for the non-payment of calls due to the company. The Articles may also permits other grounds also for forfeiture of shares.
3. A notice should be served on the defaulting members for the unpaid calls before the shares can be forfeited. A clear notice of 14 days must be given otherwise the notice will become invalid.
4. To show that the directors possess the power to forfeit the shares an extra notice must ne served to the defaulting members.
5. Forfeiture of shares will become invalid, if the call in respect of which the forfeiture is made is invalidly done or the notice is inaccurate.
6. Calls should be validly made, if the forfeiture is for non payment of calls.
7. If the requirement of the notice is not complied with the shares in respect of which the notice has been passed, it may be forfeited by a resolution of the Board to that effect.
8. The power to forfeit the shares must be exercised bonafide and in good faith.