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Query about forfeiture of shares

Jimi KR (CA student) (89 Points)

28 December 2012

The forfeiture of shares does not amount to reduction of share capital.In this contex share capital means Authorised capital or Issued capital?

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2 Replies

CA Gowri Pramod Kanamarlapudi (CA in practice) (341 Points)
Replied 31 December 2012

Issued Share capital

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CS Amit Kumar (CS) (463 Points)
Replied 01 January 2013

Issued Capital,

and further reduction of share capital is also means reduction in paid up share capital.

Logic is that Supposs a company have 50 Crore Paid up capital and lenders is giving fund on this ground and one day they come to know that now paid up is 5 crore because director have reduced it in that case lenders may face a difficulity to claim their money if default occurs,

Further Authorised is authorised , company may call or not, share holders are only responsible for subscibed shares not for unsubscribed , and hence unsubscirbed authorised capital can be changed in any nature i.e form equity to preference and vice versa

Regards,ACS Amit Kumar

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