Lien of Shares

3384 WordsSep 15, 201314 Pages
The terms Lien of shares, Surrender of shares & Forfeiture of shares are explained in detail as follows : Lien of shares : A lien is the right to retain possession of a thing until a claim is satisfied. In the case of a company lien on a share means that the member would not be permitted to transfer his shares unless he pays his debt to the company. The articles generally provide that the company shall have a first lien on the shares of each member for his debts and liabilities to the company. The right of lien is not inherent but must be clearly provided for in the articles. The articles may give the right of lien over share either for unpaid calls or for any other debt due by the member of the company. The company may have lien on…show more content…
The Company has no lien or equitable charge on the members ' shares for sums owed by them to it, unless the lien is expressly conferred by the Articles | | If there is no such power, then, as given in Nanalal Zaveri & Another v The Bombay Life Assurance Co. Ltd., All India Reporter 1950 Supreme Court 172, the Articles may be amended and then the right exercised, provided the amendment is bonafide, in the interest of the Company and enures for the benefit of the Company | | If the Articles contain the right of lien without confering the power of sale, the Company should file a suit to enforce its lien (Everitt v Automatic Weighing Machine Co. (1892) 3 Chancery 506} | | Usually, the Articles give the Company power to nominate someone to execute the transfer (pursuant to a sale) | | The sale of shares is subject to any restrictions on the transferability of those shares contained in the Articles of a private company | | Where fully paid-up shares are, under the original Articles of a company exempt from lien, the Articles may be altered so as to give the company a lien over them | | Gore-Browne, 44th edn at Pg 14.022 says, "While a lien can be created by retrospective alteration of the Articles after the issue of shares, it will not be effective against
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