alleryForfeiture of shares means
ACancellation of shares for non-payment of calls
BBuying back shares (typical) (typical)
CIssuing bonus shares (typical) (typical)
DTransferring shares to new holder (typical)
Answer & Solution
Correct answer: A. Cancellation of shares for non-payment of calls
1. When a shareholder defaults on calls, directors can forfeit the shares under the Articles.
2. Amount already paid is forfeited (credited to Forfeited Shares A/c).
3. The forfeited shares can be re-issued, often at a discount limited to the forfeited amount.
4. Hence (B) is correct.
_Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 8 "Company Accounts - Issue of Shares", §8.5 ¶§8.5_
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