Company Accounts

Share Capital

Easy

common

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 a security

✅ Correct Option: 1

Shares can be forfeited only for non-payment of call money.

When a company issues shares, it may collect the share price in installments - Application money, Allotment money, and one or more Calls. If a shareholder fails to pay the amount due on any call even after proper notice, the Board of Directors has the authority to forfeit (cancel) those shares.

Forfeiture is essentially the cancellation of shares and the member's name is removed from the Register of Members.

The other options are incorrect because:

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

Option 3 - A shareholder's personal loan matters with a bank are independent transactions. The company has no authority to forfeit shares for a shareholder's failure to repay bank loans.

Option 4 - When shares are pledged as security to a bank or lender, the company does not forfeit them. If the loan defaults, the pledgee (bank) may sell the shares, but this is not forfeiture by the company.

Forfeiture is strictly a remedy available to the company for recovering unpaid call money, and it must be done as per the provisions in the Articles of Association and the Companies Act.

2026: 23 May Shift 2

The Profit on reissue of forfeited shares is transferred to :

2025: 13 May Shift 1

Which of the following statements are correct?

(A) A company is an artificial person.

(B) Company's shares are generally transferable.

(D) The part of capital which is called up only on winding up is called reserve capital.

Choose the correct answer from the options given below:

2026: 13 May Shift 2

A company forfeited 8,000 shares of 20 each on which application money Rs. 6 has been paid. Out of these, 4,000 shares were reissued as fully paid up and Rs. 16,000 has been transferred to capital reserve. Calculate the rate at which these shares were reissued.

2026: 6 June Shift 1

Match List-I with List-II

List-I	List-II
(A) Subscribed but not fully paid up capital	(I) Shown under "Other Current Liabilities" in Balance Sheet
(B) Calls in Arrears	(II) Shown under "Reserves & Surplus" in Balance Sheet
(C) Calls in Advance	(III) Deducted from Subscribed Capital
(D) Securities Premium	(IV) Share Capital Note Disclosure

Choose the correct answer from the options given below:

2026: 11 May Shift 1

The balance of Share Forfeiture account is shown as an addition to the total paid-up capital of the company. Under which head and title of the Balance Sheet it will be shown, until the forfeited shares are reissued?

A. 'Share Capital' under the title "Liabilities and Equity"

B. 'Reserve and Surplus' under the title "Liabilities and Equity"

C. 'Shareholders' Funds' under the title of "Equity and Liabilities"

D. 'Share Capital' under the title 'Equity and Liabilities'

Choose the correct answer from the options given below:

2026: 21 May Shift 2

Correct sequence of steps in the procedure of share issue are :

A. Receipt of applications

B. Issue of prospectus

C. Forfeiture of shares

D. Allotment of shares

Choose the correct answer from the options given below:

Shares can be forfeited :

Solution

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