Calls and Forfeiture of Shares Calls and the forfeiture of shares are mechanisms used by corporations to acquire or remove shareholders' ownership interests....
Calls and the forfeiture of shares are mechanisms used by corporations to acquire or remove shareholders' ownership interests. There are two main types of calls: ordinary calls and extraordinary calls.
Ordinary calls are typically made when the corporation has sufficient capital to repurchase its own shares at a set price. This is done to maintain a certain minimum share capital and to reflect changes in the company's financial health. Ordinary calls can be made at any time, but the company must give shareholders reasonable notice before doing so.
Extraordinary calls are typically made when the corporation needs to raise capital quickly or when there is a change in the company's business plans that requires the purchase of additional shares. Extraordinary calls are typically made at the discretion of the board of directors, and they must be approved by shareholders through a majority vote.
In addition to calls, a corporation can also be forced to fortify shares if the company is in default of its debts. Forfeiture means that the company takes back the shares from the shareholders. Forfeiture can be done if the company has a default judgment against it or if the shareholders approve a resolution to take back the shares.
The process of calls and forfeiture can be complex and can have significant financial and legal implications. Companies should carefully consider the terms of any call or forfeiture before taking any action