Forfeited Share

Forfeited Share – A forfeited share arises when a shareholder fails to pay the call money or violates other terms of the share purchase agreement. As a result, the company cancels or forfeits the shares, and the shareholder loses their original investment. Share forfeiture is typically executed with approval from the board of directors. Key Features: Occurs due to non-payment of calls or breach of agreement terms. Requires board approval before shares are officially forfeited. The original amount paid by the shareholder is forfeited by the company. Forfeited shares may be reissued or sold by the company to new investors.

Example: An investor subscribes to 100 shares of a company at ₹10 per share but fails to pay the second call of ₹5 per share. The company forfeits the shares, and the investor loses the amount already paid (₹10 per share × 100 shares = ₹1,000)..