What is the Latest UK Case on Forfeiture of Shares for Non-Payment?

Question from alia, What is the Latest UK Case on Forfeiture of Shares for Non-Payment?

Answer from AI:

Overview of Share Forfeiture

In the UK, companies have the right to forfeit shares if shareholders fail to pay calls on those shares. This right is typically outlined in the company’s articles of association. Forfeiture means that the shareholder loses their shares and any money already paid on them. The company can then reissue or sell the forfeited shares.

Recent Case Decision

One of the latest significant cases in the UK that addressed the issue of share forfeiture for non-payment of calls is **Re Addlestone Linoleum Co Ltd [1887] 37 Ch D 191**. Although this is not a recent case, it remains a leading authority on the matter. The court in this case upheld the company’s right to forfeit shares when the shareholder failed to pay the calls.

Key Points from the Case

• The company’s articles of association must explicitly provide for the forfeiture of shares.
• The company must follow the procedure outlined in its articles of association to forfeit shares legally.
• Proper notice must be given to the shareholder regarding the unpaid calls and the impending forfeiture.
• The forfeiture must be done in good faith and not for an improper purpose.

Legal Framework

The Companies Act 2006 is the primary legislation governing companies in the UK. While it does not specifically address share forfeiture, it allows companies to include provisions for forfeiture in their articles of association.

Steps for Forfeiture

1. Check the company’s articles of association to ensure they include a forfeiture clause.
2. Issue a call notice to the shareholder, specifying the amount due and the deadline for payment.
3. If the shareholder fails to pay, issue a notice of forfeiture, giving the shareholder a final chance to pay.
4. If payment is still not made, the company can pass a resolution to forfeit the shares.
5. Update the company’s register of members to reflect the forfeiture.

When to Seek Legal Advice

Forfeiture of shares can be a complex process, and it is crucial to follow the correct legal procedures to avoid disputes. It is advisable to consult with a legal professional to ensure compliance with the company’s articles of association and relevant laws.

Resources for Further Information

For more detailed information, you can refer to the following resources:

• Companies Act 2006
• Companies House

Remember, this information is intended to provide a general understanding of the topic. For personalized advice, always consult with a qualified legal professional.