Re-Issue of Forfeited Shares Where a company had lien on fully paid shares belonging to the deceased shareholder, it is obligatory on the company to give notice of its sale to the legal representative of the deceased shareholder, but if this is not done the sale would nevertheless be a valid sale. Shares forfeited by a company may either be cancelled or re-issued to another person at the discretion of the Board. Generally, such shares are re-issued at a discount which cannot exceed the amount already paid on such shares provided that the total of the sum paid by the original owner of the shares together with the re-issue price is not less than the par value. This is done by a Board resolution. After the money due is received from the new allottee, the company executes a transfer deed and issues a share certificate, and if the original holder has already surrendered the share certificate, it is duly transferred, otherwise after a public notice in a newspaper, a new share certificate is issued.
28 June 2013
Re-issue/Disposal of Forfeited Shares: No Allotment Return (Form-2) to be Filed:
According to section 75 (1) of the Companies Act, 1956, a company is required to file a return of allotment of shares and not for-reissued of forfeited shares. Allotment is, appropriation of the previously un appropriated capital of the company, of a certain number of shares to certain person. Till such allotment, the shares do not exist as such. However, in the case of forfeited shares, they had already been allotteed and they had come into existence at the time of their allotment and their forfeiture is a proof of their existence. Therefore, no return of allotment is required to be filed with ROC by a company at the time of re-issue or disposal of forfeited shares. [Sri Gopal Jalan and Co. V. Calcutta Stock Exchange Association ( 1963) 33 Com. Case 862: AIR 1964 SC 250].
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