Unpaid Share Money explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When a shareholder does not pay a call on partly paid shares, the company has two broad options: recover the sum, or forfeit the shares under its articles. The Companies Act, 2013 itself says little about forfeiture; the procedure sits in the company's articles, and for a company that adopted the model articles, in Table F of Schedule I. This guide reads the Act in the Ministry's consolidated text (last updated 29 July 2022) and Table F as printed in it. Later amendments should be checked.
The Act requires calls on a class of shares to be uniform, lets the articles bar voting where calls are unpaid, and lets the articles allow dividends in proportion to the amount paid up. The forfeiture steps are in the articles. Under Table F, the Board serves a notice naming a day not earlier than fourteen days from service, and forfeits by a Board resolution if the sum is still unpaid. The company's own articles decide.
What the Act itself says
- Section 49: where calls for further share capital are made on the shares of a class, they must be made on a uniform basis on all shares of that class. By the Explanation, shares of the same nominal value on which different amounts have been paid up are not in the same class for this purpose.
- Section 50: if the articles allow, a company may accept from a member the whole or part of the unpaid amount even if not called up; the member has no voting rights on that amount until it is called up.
- Section 51: a company may, if authorised by its articles, pay dividends in proportion to the amount paid up on each share.
- Section 106(1): the articles may provide that no member exercises a voting right on shares registered in his name on which calls or other sums presently payable have not been paid, or on which the company has exercised a right of lien. Section 106(2) says the company may not prohibit voting on any other ground.
Nothing in these sections prints a forfeiture procedure. For that, see Table F and the articles. If your company holds partly paid shares and calls are overdue, our team can review the articles and draft the notices; see our allotment of shares and PAS-3 service.
Recovering the call as a debt
Table F, regulation 13, lets the Board make calls on members for any money unpaid on their shares, whether on account of the nominal value or by way of premium. The proviso says no call shall exceed one-fourth of the nominal value of the share or be payable at less than one month from the date fixed for the last call. Each member must receive at least fourteen days' notice specifying the time and place of payment. Regulation 16 charges interest from the day appointed for payment at ten per cent per annum, or such lower rate as the Board may determine; the Board may waive the interest in whole or part. Regulation 15 makes joint holders jointly and severally liable. Regulation 17 treats a sum payable at a fixed date under the terms of issue as a call duly made.
Regulation 32(i) preserves the liability even after forfeiture, for sums presently payable at the date of forfeiture. The Act's own text does not say how a debt is enforced in a court; this article states nothing on that.
Forfeiture: the steps in Table F
| Step | What Table F says | Regulation |
|---|---|---|
| 1. Call made | Board resolution authorising the call; the call is deemed made when the resolution was passed | 13, 14 |
| 2. Reminder | If a call is not paid on the day appointed, the Board may serve a notice requiring payment of the unpaid sum with accrued interest | 28 |
| 3. Forfeiture notice | Name a further day, not earlier than expiry of fourteen days from service, and state that shares are liable to be forfeited on non-payment | 29 |
| 4. Board resolution | If the notice is not complied with, the shares may be forfeited by a Board resolution, before payment is made | 30 |
| 5. Register | The holder ceases to be a member for the forfeited shares but stays liable for sums presently payable at forfeiture | 32 |
| 6. Disposal | A forfeited share may be sold or disposed of on terms the Board thinks fit; the Board may cancel the forfeiture before sale | 31 |
| 7. Evidence | A verified declaration by a director, the manager or the secretary that a share was duly forfeited on a stated date is conclusive evidence | 33 |
| 8. Transfer | The company may receive the consideration, execute a transfer and register the transferee | 33 |
Regulation 34 applies the same forfeiture provisions to a sum payable at a fixed time under the terms of issue.
Table F is the model for a company limited by shares. A company with its own articles follows them, and where the articles are silent they cannot be assumed to match Table F. Private companies have exemptions from some provisions by notification under section 462; check whether one applies.
Dividend on partly paid shares
Section 51 permits dividends in proportion to the amount paid up if the articles allow. Without that authority, check what the articles provide before declaring a dividend on partly paid shares. For dividend rules, see our guide on dividend waiver and dividend in kind.
Re-issue and the return of allotment
Table F regulation 31(i) lets the Board sell or otherwise dispose of a forfeited share on terms it thinks fit. Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires a return of allotment, Form PAS-3, "whenever a company having a share capital makes any allotment of its securities", within thirty days. Rule 12 does not say in terms whether a sale of forfeited shares is an allotment; check the position with your advisor before treating it either way.
Balance sheet disclosure
Schedule III (Division I) notes on share capital require disclosure of calls unpaid (showing the aggregate value of calls unpaid by directors and officers) and of forfeited shares (amount originally paid up).
Worked example (invented figures)
Delta Hardware Private Limited has 1,000 shares of nominal value Rs 10 each, issued at Rs 2.50 paid up. The Board makes a first call. Under regulation 13's proviso, a call cannot exceed one-fourth of the nominal value: 10 / 4 = Rs 2.50 per share. For a holder of 100 shares, the call is 100 x 2.50 = Rs 250. If unpaid on the due date, interest runs at up to ten per cent a year from that date; on Rs 250 for one year that is Rs 25 at the full rate. The Board serves a forfeiture notice giving at least fourteen days from service. If still unpaid, the Board resolves to forfeit the 100 shares; the holder stays liable for Rs 250 presently payable at forfeiture.
Common mistakes
- Making calls that differ between shares of the same class.
- A forfeiture notice with a day earlier than fourteen days from service.
- Forfeiting without a Board resolution, or after the payment has been made.
- Not recording the forfeiture and the transferee in the register.
- Applying Table F when the company has its own articles that say something else.
Need help with unpaid calls?
We can review your articles, draft the call and forfeiture notices and the Board resolutions, and file the returns that follow. See our allotment of shares and PAS-3 service.
Key takeaways
- The Act sets uniform calls and voting rules; the articles set the forfeiture steps.
- Table F requires fourteen days' notice before forfeiture.
- A Board resolution forfeits the shares.
- The former holder remains liable for sums presently payable at forfeiture.
- Schedule III requires disclosure of calls unpaid and forfeited shares.
Read next
- Forfeiture of Shares: Grounds, Process and Re-issue
- Private Placement of Shares Step by Step
- Treasury Shares: Can a Company Hold Its Own Shares
- Board Resolution for Forfeiture of Shares
Disclaimer: Based on the Companies Act, 2013 in the Ministry of Corporate Affairs consolidated text (last updated 29 July 2022), the Rules as consolidated in the Ministry's e-book and the other official texts named in this article, as consulted on 3 October 2026. Later amendments, notifications, circulars, forms and fees should be checked. Formats are general drafts to be adapted to the company's articles and facts. This article is general information, not legal advice; check the official text before acting.