business law.pptx

7/28/2019 BUSINESS LAW.pptx

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Surrender Of Shares,forfeiture Of

Shares, Transmission Of SharesPresented By

Supreetha Shetty


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Surrender Of Shares

When share holder of a company voluntarily

gives up his shares in favour of the company, he

is said to have surrendered them to the

company.


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Surrender of shares by a member to the

company is valid in the following cases: In Case Partly Paid Shares Where Forfeiture Is

Called For:

Where article gives power to the directors to accept

surrender of shares and it is accepted in case of partly

paid shares to save the company from going through the

formalities of forfeiture, the surrender is valid. Any

provision in the articles for the acceptance of surrenderin other circumstances is invalid.


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In Case Of Fully Paid Shares , Where They Are

Exchanged For New Shares:

Where surrender of shares is in accordance with the Articles

and accepted in case of fully paid shares in exchange for new

shares of the same nominal value and the surrendered shares

remain capable of re issue, the surrender is valid

surrendered shares can be validly reissued in the

same way as forfeited shares, if the Articles authorise their reissue.


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Forfeiture of shares

Forfeiture means depriving a person of his property as apenalty for some act or omission .

The company may forfeit the shares of a share holder for

non payment of some call/ calls if the following

conditions are satisfied:

1. In Accordance With Articles :

A forfeiture must be authorised by the provisions

of the articles are strictly complied with.


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2.Notice Prior To Forfeiture:

Before shares can be forfeited, the company must serve a

notice on the defaulting shareholder requiring payment of the

unpaid call together with any interest which may have

accrued.(Article 29 of table A ).The notice must-

a) Give not less than 14 days time from the date of notice for

the payment of the amount due .and

b)State that in the event of non- payment of the amount due

within the period mentioned in the notice, the shares in

respect of which the call was made will be liable to be

forfeited.must also specify

> The exact amount due from the share

holder.


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3.Resolution of the board :

If the defaulting shareholder does not pay theamount within the specified time as required by the notice,

the directors must pass a resolution forfeiting the shares .

4.Good faith:

the power to forfeit shares must be exercised by

the directors in good faith and for the


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Effect of forfeiture

a) cessation of membership:A person whose shares have been forfeited ceases

to be a member in respect of the forfeited shares . But

notwithstanding the forfeiture he remains liable to pay to the

company all moneys which, at the date of forfeiture , were

payable by him to the company in respect of the shares .

b) Cessation of liability

the liability of the person whose shares have been

forfeited ceases if and when the company receives payment in

full of all such money in respect of the shares.


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TRANSMISSIONOF SHARES

Any person who becomes a nominee by virtue of the

provisions of [sec109-A],upon the production of such evidence as may be

required by the Bored of directors, may elect, either-

a). To be registered himself as holder of the shares or

debenture, as the case may be; or

b).To make such transfer of the shares or debenture as

the deceased shareholder or debenture holder could have

made

Right to decline:

The Board shall, in the above cases, have the rightto decline or suspend registration as it would have had, if

the deceased shareholder or debenture- holder had

transferred the share or debenture, before his death.


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Right of the nominee:

If the person, being a nominee, so becoming entitled,

elects to be registered as holder of the shares or debenture

himself, he shall deliver or send to the company a notice inwriting signed by him stating that he so elects. Such notice shall

be accompanied with the death certificate of the deceased

shareholder- holder.

Dividend:

A person, being a nominee, becoming entitled to a

share or debenture by reason of the death of the holder, shall

be entitled to the same dividends and advantages to which he

would be entitled if he were the registered holder of the share

or debenture. But he shall not be entitled , before being

registered as a member, to exercise any right conferred by

membership in relation to meetings of the company


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Notice by the board :

The Board of directors may, at any time, gives notice

requiring the person becoming entitled to a share or

debenture by reason of the death of the holder to elect eitherto be registered himself or to transfer the share or debenture.

If the notice is not complied with within 9o days, the bored

may thereafter withhold payment of all dividends or bonuses

or other moneys payable in respect of the share or debenture,until the requirements of the notice are complied

with[provision to sec . 109(5)].


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