Payment of amount for shares

Payment of amount of shares

(1) An amount for a share shall be paid up within the period of a call made in accordance with the articles of association.

(2) In making a call pursuant to Sub-section (1), a company shall send every shareholder a written notice, in the prescribed format, specifying a time-limit of at least thirty days and the installment payable by him/her, the place and time for payment. A public company shall also publish such notice, for at least three times, in a daily newspaper with national circulation.

(3) If a shareholder fails to pay the sum called and payable in respect of the share within the period as referred to in Sub-section(2), a notice shall be sent to the concerned shareholder, giving an additional period of three months after the date of expiration of that period, and specifying clearly that if payment is made within that period, it shall be accepted, along with interest at the prescribed rate and if that shareholder fails to make payment even within that period, his/her share shall be liable to be forfeited. In the case of a public company, such notice shall also be published in a daily newspaper with national circulation for at least three times. In the installment called is not paid even within the time-limit as mentioned in that notice , the company may forfeit all or the remaining shares after retaining the number of shares as fully paid up to the extent of the amount paid upon the shares in respect of which the company has given such notice or also to the extent of the amount of dividends, if any, attached in respect of such shares.

            Provided, however, that where the company has already undergone liquidation or insolvency prior to the forfeiture of shares, any amount due and payable in respect of the shares liable in accordance with the prevailing law.

(4) Where any share is forfeited under Sub-section (3), the board of directors may refund the amount already paid up in respect of the share so forfeited and the amount equal to the dividends, if any attached in respect of such share, or issue the share to the extent covered by such amount; and where the amount is to be refunded, it has to be refunded within three months after the forfeiture of share.

(5) In the event of failure to make the refund within three months pursuant to sub- section (4), interest chargeable on such amount after the expiration of that period shall also be paid.

(6) The shares forfeited under Sub-section (3) may be sold or otherwise disposed of in such manner as the board of directors may, subject to the articles of association, thinks fit.

(7) A company which has been making profits for a period of three consecutive years or more may, by a special resolution adopted at its general meeting determines that a call may not be made in respect of the certain portion of its share capital not called on except in the case of liquidation or insolvency of the company.

(8) After a special resolution has been adopted under Sub-section (6), a call may not be made on the amount of share capital that is yet to be called on as mentioned in that resolution except where the general meeting, by adopting another special resolution, decides to make such call and except in the case of liquidation or insolvency of the company.