Removal of a shareholder
This query is : Open
15 August 2017
Dear Experts,
One of my clients private limited has offered share to employee as right issue on a certain value . there was formal agreement for the same. he had taken the loan from company and bought the shares . We have filed PAS-3 for all shareholders. After few months he left the company and did not repaid the loan amount due to him. he however signed a note that if he he fails to repay the loan in 1 year his shares should be forfeited.He has not made any payment for last 1 year . Is it possible to remove him. we expect no co-operation from him if we transfer his shares.
What options we have to remove/terminate/transfer his shares from the company.
One of my clients private limited has offered share to employee as right issue on a certain value . there was formal agreement for the same. he had taken the loan from company and bought the shares . We have filed PAS-3 for all shareholders. After few months he left the company and did not repaid the loan amount due to him. he however signed a note that if he he fails to repay the loan in 1 year his shares should be forfeited.He has not made any payment for last 1 year . Is it possible to remove him. we expect no co-operation from him if we transfer his shares.
What options we have to remove/terminate/transfer his shares from the company.
CA Suresh Jain
(Expert)
19 August 2017
There is no provision for forfeiture of Shares by the Company in the circumstances given by you. The Company has given the loan for subscription of its shares is a contravention of Companies act.
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