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 a security

✅ Correct Option: 1

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

When a company issues shares, the amount may be called in installments - Application Money, Allotment Money, First Call, Second Call, and Final Call. Each shareholder is obligated to pay these amounts when called by the company.

If a shareholder fails to pay any of these calls (allotment or subsequent calls) despite receiving proper notice, the company has the right to forfeit those shares as per the Articles of Association and provisions of the Companies Act.

Why other options are incorrect:

Option 2 - Failure to attend meetings is not a ground for forfeiture. Shareholders have the right (not obligation) to attend meetings.

Option 3 - Personal loan defaults by a shareholder with a bank have no connection with the company's right to forfeit shares.

Option 4 - When shares are pledged as security to a lender, it creates rights for the lender (not the company). The company cannot forfeit shares merely because they are pledged. Forfeiture is only for non-payment of calls to the company.

The forfeiture process requires:

Proper notice to the defaulting shareholder
Reasonable time to make payment
Board resolution for forfeiture
Compliance with Articles of Association

After forfeiture, these shares can be reissued by the company as per regulations.

2022: 8 Aug Shift 2

Premium on issue of shares can be used for:

2026: 29 May Shift 1

A company issuing sweat equity shares has to fulfill the following prescribed conditions :

(A) These shares are of the same class of shares already issued.

(B) It is authorized by a special resolution passed by a company.

(D) Not less than one year has, at the date of issue, elapsed since the date on which the company had commenced business.

Choose the correct answer from the options given below:

2022: 15 July Shift 2

The amount received on allotment was

2025: 30 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Under Subscription	(I) Issue of Shares at an amount more than the nominal or par value of shares.
(B) Issue of Shares at a Premium	(II) It is a situation where the number of shares applied for is less than the number for which applications have been invited for subscription.
(C) Over Subscription	(III) The amount so received from the shareholders when shareholders pay a part or the whole of the amount of the calls not yet made.
(D) Calls in Advance	(IV) when applications for more shares of a company are received than the number offered to the public for subscription.

Choose the correct answer from the options given below:

2025: 30 May Shift 2

Select the TRUE statement related to the issue/re-issue of equity shares.

2025: 30 May Shift 1

The maximum amount of discount on the re-issue of forfeited shares will be :-

Shares can be forfeited :

Solution

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