Shares can be forfeited: Option 1: for non-payment of call money Option 2: for failure to attend meetings Option 3: for failure to repay the loan to the bank Option 4: for which shares are pledged as security

Answer: for non-payment of call money. Solution: Forfeiture of Shares Shares can be forfeited only for non-payment of call money (or allotment money). What is Forfeiture? Forfeiture means cancellation of shares due to non-payment of amount due on shares. When a shareholder fails to pay the allotment money or call money despite proper notice, the company has the right to forfeit (cancel) those shares. Legal Ground for Forfeiture The only valid reason for forfeiting shares is: - Non-payment of allotment money or call money by the shareholder - This must be after giving proper notice to the defaulting shareholder Why Other Options are Incorrect Option 2 (Failure to attend meetings): Attending meetings is a right of shareholders, not an obligation. Non-attendance cannot lead to forfeiture. Option 3 (Failure to repay loan to bank): Personal loan defaults by a shareholder are separate from their shareholding in the company. The company cannot forfeit shares for this reason. Option 4 (Shares pledged as security): Pledging shares as security is a legitimate transaction. The shares may be transferred to the lender if the loan defaults, but this is not forfeiture by the company. Correct Answer: Option 1 - Shares can be forfeited for non-payment of call money.

Company Accounts

Share Capital

Easy

Shares can be forfeited:

for non-payment of call money

for failure to attend meetings

for failure to repay the loan to the bank

for which shares are pledged as security

✅ Correct Option: 1

Forfeiture of Shares

Shares can be forfeited only for non-payment of call money (or allotment money).

What is Forfeiture?

Forfeiture means cancellation of shares due to non-payment of amount due on shares. When a shareholder fails to pay the allotment money or call money despite proper notice, the company has the right to forfeit (cancel) those shares.

Legal Ground for Forfeiture

The only valid reason for forfeiting shares is:

Non-payment of allotment money or call money by the shareholder
This must be after giving proper notice to the defaulting shareholder

Why Other Options are Incorrect

Option 2 (Failure to attend meetings): Attending meetings is a right of shareholders, not an obligation. Non-attendance cannot lead to forfeiture.

Option 3 (Failure to repay loan to bank): Personal loan defaults by a shareholder are separate from their shareholding in the company. The company cannot forfeit shares for this reason.

Option 4 (Shares pledged as security): Pledging shares as security is a legitimate transaction. The shares may be transferred to the lender if the loan defaults, but this is not forfeiture by the company.

Correct Answer: Option 1 - Shares can be forfeited for non-payment of call money.

2025: 27 May Shift 2

Identify the sequence of journal entries with regard to transfer of shares application money and allotment of shares:

(A) Share Allotment A/c Dr.

To Share Capital A/c

(B) Share Application A/c Dr.

To Share Capital A/c

To Share Allotment A/c

(D) Share Application A/c Dr.

To Bank A/c

Choose the correct answer from the options given below:

2022: 23 Aug Shift 2

Securities Premium Reserve as per section 52(2) of the companies Act 2013 can be used :

(A) To write-off preliminary expenses of the company

(B) To issue fully paid bonus shares to the extent not exceeding unissued share capital of the company

(D) To write off discount allowed on the goods sold on credit

Choose the correct answer from the options given below :

2026: 13 May Shift 1

Varun Ltd. forfeited 40,000 equity shares of Rs. 100 each for non-payment of first and final call of Rs. 40 per share. The maximum amount of discount per share at which these shares can be re-issued will be :-

2026: 19 May Shift 1

Choose the correct order of the following in the Notes to Accounts of the Balance Sheet of the company:

(A) Calls in arrear

(B) Nominal Capital

(D) Subscribed and fully paid up capital

Choose the correct answer from the options given below:

2022: 23 Aug Shift 2

Match List - I with List - II.

List - I	List - II
(A) Share forfeiture	(I) Cr. share capital
(B) Shares reissued	(II) Dr. share capital
(C) Excess application money refunded	(III) Dr. Bank A/c
(D) Calls money received	(IV) Cr. Bank A/c

Choose the correct answer from the options given below :

2026: 31 May Shift 1

In the case of a One-Person Company, as per Rule 3 of the Companies (Incorporation) Rules, 2014, which of the following statement is not true?

Shares can be forfeited:

Solution

Forfeiture of Shares

What is Forfeiture?

Legal Ground for Forfeiture

Why Other Options are Incorrect

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)