DRAFT RULES UNDER COMPANIES ACT, 2013 . It is return of shares voluntarily by the member to the company. Section 53 of The Companies Act, 2013 prohibits issue of equity shares at a discount. Reason: Surrender takes place due to the inability of a shareholder to pay the call money. The provisions of this chapter shall apply to all unlisted companies and to listed companies so far as they do not contradict or conflict with any other provision framed in this regard by the Securities and Exchange Board. As per section 2(20) of the Companies Act, 2013, A Company is defined as “an incorporated association which is an artificial person, having a separate legal entity, with perpetual succession, a common seal, a common capital compromised of transferable shares and limited liability.” Shares are mainly derived from the share capital of a company. Under Sec. To Unpaid Calls a/c To Share Forfeiture a/c 9. Sometimes, Articles of Association empowers the Directors to accept Surrender of Shares. Forfeiture of Shares Issued at a Discount : Share Capital a/c Dr. 64 of the Companies Act, 2013 the company shall give notice of the alternation of capital to the registrar within 45 days. Companies Act, 2013 While there is no specific section of the Act that deals with forfeiture of shares, Schedule 1 of the Companies Act, 2013 which contains the model Articles of Association provides a company with the power to forfeit shares on which amounts remain unpaid after calls are made. Forfeiture of shares is a very long process, so articles nay allow for surrender of shares as a shortcut to forfeiture process. 14. There is no provision in Table A of the Companies Act regarding surrender of shares and a company cannot possibly accept the surrender of fully paid up shares as it amounts to purchase of its own shares which is prohibited under Section 77. Forfeiture of shares is a penal proceeding against the shareholder for not paying the call and forfeited shares may be reissued or canceled. Initiative: Initiative is taken by share holder.Time Required: Surrender requires limited time. CHAPTER-IV . Purpose: Forfeiture is a penalty to member for non-payment of the amount of call. SHARE CAPITAL AND DEBENTURES . I think there are two possible ways to forfeit the shares: one way is through the Companies Act s.641 which would require a Special Resolution and the other way is to use the articles which sets out a process whereby the directors themselves can implement a forfeiture. Such a power can be exercised only if the articles expressly so provide and the procedure laid down there under is … 15. The purpose of a notice of forfeiture is to enable the company to get back shares from a member. 2. 4.1. The directors may, at any time serve a notice on a member requiring payment to be done on unpaid shares. (1) Surrender of Shares: Meaning: It is a voluntary return of shares by a member to the company. Nature of Action: It is voluntary action by the share holder. Forfeiture and Surrender of Shares : Forfeiture is the remedy for non-payment of calls or instalments of call or other sums as premiums due in respect of shares. Forfeiture and Surrender of shares is a case of capital reduction. Meaning: It means compulsory termination of membership by confiscating (take away) shares. Forfeiture of Shares: Surrender of Shares: 1. False. Surrender of shares reduces the share capital, however surrendered shares can be reissued in the same way as forfeited shares. A notice of forfeiture or surrender of shares (Companies Form 12) is filed to the Registrar under section 148 of the Act. The word “And Reduced” is added to the name of the company for such period as the court deems fit. 10. Effect: Surrender of shares does not affect … Our client does not want to have to hold a shareholder meeting if possible. False, 30 days. Forfeiture of Shares originally issued at discount This topic is irrelevant now. 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