SECRETARIAL PRACTICE

A power of forfeiture must not be exercised in the interests
of a shareholder to enable him to escape liability, but in the
interests of the company [Spackman v. Evans (1868), L.R.
3 H.L. 171].

Notwithstanding forfeiture a shareholder is liable to pay all
calls owing at the time of the forfeiture, with interest, if the
regulations so provide [Stocken’s Case (1868), 3 Ch. App. 412].
And where shares have been forfeited for non-payment of
calls and re-sold, then (though Table A of 1862, cl. 22, applies)
fresh calls may be made on the purchaser for the unpaid
amount [New Balkis Eersteling v. Randt Gold Mining Co.
1904), A.C. 165]. But he is entitled, in the absence of
agreement to the contrary, to be credited with sums paid
by the original holder since forfeiture [re Randt Gold Mining
Co. (1904), 2 Ch. 468]. It has been held that where by the
articles of association a member is not entitled to vote when
calls are due from him, and is liable to pay the calls even after
forfeiture, the purchaser of shares forfeited for non-payment of
calls is not entitled to vote so long as the calls are unpaid by
the original holder [Randt Gold Mining Co. v. Wainwright
(1901), T Ch. 184].

The articles generally contain a power for the directors to
annul a forfeiture. But such a power cannot be exercised
adversely to the former shareholder, so as to make him liable
for calls made subsequently [re Exchange Trust, Larkworthy’s
Case (1903), 1 Ch. 711].

A Form of Resolution of the board to forfeit shares will be
found in Chapter XIV.

A bond fide forfeiture made in accordance with the regu-
lations of the company will not be disturbed by the Courts
(Sparks. v. Liverpool Waterworks Co. (1807), 13 Ves. 428].
A shareholder may bring an action to set the forfeiture aside
if he desires to test its validity [Sweney v. Swath (1869),
7 Eq. 324]. A slight irregularity, e.g. claiming interest
from date of call instead of date of payment, is sufficient for
the Court to annul a forfeiture [Johnson v. Lyttle’s Iron
Agency (1877), 5 Ch. D. 687]. Forfeiture will be restrained
pending the trial of an action for rescission upon proper terms.

In Jones v. Pacaya Rubber Co. (1911), 1 K.B. 455 and Lamb
v. Sambas Rubber Co. (1908), 1 Ch. 845, the injunction was
granted subject to payment into Court of the amount due on
the shares. In these cases, however, the shareholder con-
sented to make such payment and in the former case, Buckley
L]J., expressly reserved the question whether if he had been
unwilling to do so, the injunction would have been refused.
In Radium Springs v. How [(1929), not yet reported], the