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What is Share Forfeiture ? State the Procedure of Forfeiture of Shares . 

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If any Shareholder Fails to Pay the Amount Due on Allotment or on Any Call within the Specified Period , the Directors may Cancel the Shares . This is called “Forfeiture of Shares” . The Shares can be Forfeited only if the Articles of Association of the Company allows them to be Forfeited . In order to make the Forfeiture Valid , it is Essential to Follow the Rules Laid Down in the Articles . If No Rules are given in Articles , the Provisions of Table F of Schedule I of the Companies Act , 2013 regarding Forfeiture Apply . The Usual Procedure is that the Defaulting Shareholder must be given a Minimum of 14 Days Notice Requiring Him to Pay the Unpaid Amount on His Shares , together with the Accrued Interest thereon . The Notice must state that , if the Unpaid Interest is Not Paid , within a Certain Period , His Shares shall be Forfeited . If in spite of this Notice , the Shareholder still does not pay the Unpaid Amount on His Shares , His Shares may be Forfeited by a Resolution of the Board of Directors . After the Forfeiture , the Name of the Sharehoder is Removed from the Register of Members. The Amount already Paid by Him Belongs to the Company and is Not Returned to Him and this Amount of the Defaulting Shareholder is Credited to Share Forfeiture Account . Journal Entry for the Forfeiture is passed as :

Share Capital A/c. Dr    (Number of Share Forfeited x Called Up Value Per Share)

To Share Allotment A/c  (Amount Not Received on Allotment)

To Share Call A/c       (Amount Received on Application , Allotment and Calls so far)

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