Forfeiture of share of minority shareholders

Pvt ltd 1491 views 3 replies

Sir,

Please solve my query below.

 

Can fully paid up shares of minority shareholders in the company be forfeited by majority shareholders in any kind of circumstances?

If minority shareholders are involve in wrong doing against the company or creating problems in the operations of the company by creating dead lock in the general meeting etc, then is it possible that majority shareholders forfeit shares of such minority shareholders. If it is possible please tell me the procedure for doing so.

 

I think it is not covered by any section of law. Please share any case law in this regard.

Thank you

Replies (3)

Please refer your AOA in this regard, first. Forfeiture can be done in compliance of the provisions of AOA of the Company.

Subject to the provisions of your Articles, you cannot forfeit shares of minority shareholders as such.  You may have to file petition u/s 397/398 for oppression or mismanagement.

 

Sir, our AOA are containing routine provisions for forfeiture like for nonpayment of calls company can forfeit shares.

 

Is there any case law which allows forfeiture of minority shareholding by majority. Further where we should seek remedy in company law or civil law, in case shareholder is creating problem in the working of company.

 

Further petition u/s 397 and 398 is for minority shareholders. Is there any specific provision/case law  which helps majority shareholders?


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