Section 165 CAMA 2020
Section 165 Companies and Allied Matters Act is about Forfeiture of shares. It is under Call on and Payment for Shares of Chapter 8 of PART B (Incorporation of Companies and Incidental Matters) of the Act.
Forfeiture of shares
(1) If a member fails to pay any call or instalment of a call on the day appointed for payment, the directors may, thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of the sum of the call or instalment as is unpaid, together with any interest which may have accrued.
(2) The notice shall state a further day (not earlier than the expiration of 14 days from the date of service of the notice) on or before which the payment required by the notice is to be made, and it shall state that in the event of nonpayment at or before the time appointed, the shares in respect of which the call was made are liable to be forfeited.
(3) If the requirements of the notice as is mentioned in subsections (1) and (2) are not complied with, any share in respect of which notice was given may, at any time thereafter, before the payment required by the notice is made, be forfeited by a resolution of the directors to that effect.
(4) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the directors think fit, and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the directors think fit.
(5) A person whose shares have been forfeited ceases to be a member in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay to the company all money which, at the date of forfeiture, were payable by him to the company in respect of the shares, but his liability ceases when the company receives payment in full of all money in respect of the shares.
(6) A statutory declaration that the declarant is a director or the secretary of the company, and that a share in the company has been duly forfeited on a date stated in the declarations, is prima facie evidence of the facts stated in it as against all persons claiming to be entitled to the shares.
(7) The company may receive the consideration, if any, given for the share on any sale or disposition of it and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of, and he shall thereupon be registered as the holder of the share, and is not bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.
(8) The provisions of this section as to forfeiture apply in the case of non- payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.