Forfeiture of Shares (Model Constitution)
The directors may from time to time make calls upon the members in respect of any money unpaid on their shares if both of the following conditions are met:
(a) no call is payable at less than one month after the date fixed for the payment of the last preceding call;
(b) at least 14 days’ notice specifying the time or times and the place of payment is given by the company to the members.
Each member must pay to the company at the time or times and place specified in the notice the amount called on the member’s shares.
A call is treated as having been made at the time when the resolution of the directors authorising the call was passed. A call may be required to be paid by instalments.
If a member fails to pay any call or instalment of a call on the day appointed for payment of the call or instalment of the call, the directors may, as long as any part of the call or instalment remains unpaid, serve a notice on the member requiring payment of the unpaid part of the call or instalment, together with any interest which may have accrued.
The notice must —
(a) name a day (not earlier than 14 days after the date of service of the notice) on or before which the payment required by the notice is to be made; and
(b) state that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made is liable to be forfeited.
If the requirements of a notice are not complied with, any share in respect of which the notice was given may, at any time after the notice is given but before the payment required by the notice has been made, be forfeited by a resolution of the directors passed for the purpose of forfeiting the share. Forfeiture includes all dividends declared in respect of the forfeited shares and not paid before the forfeiture.
A forfeited share may be sold or otherwise disposed of on any terms and in any manner as the directors think fit, and, at any time before a sale or disposition, the forfeiture may be cancelled on any terms as the directors think fit.
A person whose shares have been forfeited ceases to be a member in respect of the forfeited shares. The person remains liable to pay to the company all money which, at the date of forfeiture, was payable by the person to the company in respect of the shares (together with interest at the rate of 8% per annum beginning on the date of forfeiture on the money for the time being unpaid if the directors think fit to enforce payment of such interest).
A statutory declaration in writing that the declarant is a director or the secretary of the company, and that a share in the company has been forfeited on a date stated in the declaration, is conclusive evidence of the facts stated in the declaration as against all persons claiming to be entitled to the share.
The company may receive the consideration, if any, given for a forfeited share on any sale or disposition of the forfeited share and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of (called the transferee). Upon the company executing a transfer of the share in favour of the transferee, the company must lodge a notice of transfer of share with the Registrar under section 128 of the Act for the purpose of updating the electronic register of members to reflect the transferee as the registered owner of the forfeited share.
For more information, please contact Bestar.