Forfeiture of Shares :

Sometimes a shareholder may fail to pay any of the instalments i.e allotment or call money. In such a situation after giving due notice and following the procedures laid down in the Articles of Association, the Directors of the company can forfeit the shares that were already issued. Forfeiture of shares means to cancel the allotment to the defaulting shareholder. Once the shares are forfeited, these shares will not form part of the share capital and the shareholders will not be the members of the company.