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Reissue of forfeited share to NRI

Priya (Professional) (117 Points)

24 May 2021

Please provide the checklist for reissue of forfeited share to a non resident indian.

Will it be a fresh allotment or just a transfer of shares?

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 24 May 2021

Requirements of Forfeiture
The Board at a duly convened meeting should approve the forfeiture and authorize any director or manager or the secretary to make a declaration of such forfeiture.

An authenticated list of shares to be forfeited together with the names of shareholders thereof should be placed before the Board for this purpose.

The date of approval by the Board is the date of forfeiture.

Upon forfeiture, any director or manager or the secretary, authorized by the Board of the company shall make a declaration specifying the particulars of shares forfeited.
The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the shares of the company which have been forfeited.
The Board should issue individual notices to the defaulting members whose shares have been forfeited.
Entries in the register of members should be made with regard to forfeited shares.
Share certificates in relation to forfeited shares shall stand cancelled upon forfeiture.
There should be a reference to the forfeiture of shares in the report of the directors to the shareholders.
In case of listed companies, notice of forfeiture of shares and actual forfeiture should be intimated to the stock exchange.

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Priya (Professional) (117 Points)
Replied 25 May 2021

I need to know the process for reissue of shares whether it is allotment or just transfer of shares

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 25 May 2021

Reissue
A forfeited share may be reissued or otherwise disposed of on such terms and in such a manner as the Board may think fit.
Reissue of forfeited shares is a sale of shares and it does not amount to an allotment. The company should duly record the particulars of the members who acquire those shares as if it were a transfer of shares.

The directors would fix a price for the forfeited share that should not be lower than the amount of the call(s) due and unpaid on the share at the time of forfeiture.

In the case of a company whose shares are listed in a recognized stock exchange, re-issue of forfeited shares shall be as per Guidelines for Preferential Issue of the Securities and Exchange Board of India and the listing agreement.
Effect of Re-issue
- On reissue the transferee should be registered as the holder of the share.
- A new share certificate should be issued in the name of the transferee who shall be registered as the holder of the shares.
- The title of the transferee should not be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 26 May 2021

If too many people are not applying, it is just reissue of stocked forfeited shares. If applicants are more, they will be allotted on pro Rata

dhaval thakkar (CA) (82 Points)
Replied 27 May 2021

Please check fema guidelines in case shares are issued to NR on repatriation basis

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 27 May 2021

Yes, they will be issued as per fema guidelines which gives that person to acquire shares. while the forfeited shares as per companies act 2013 can be issued at par, premium and a discount which is not lower than the forfeited share amount. This means, they issue a discount on premiums. Again this will be a normal issue of forfeited shares on application or pro Rata basis.