Corporations Act 2001

A share in a no liability company is immediately forfeited if:

a call is made on the share; and

the call is unpaid at the end of 14 days after it became payable.

The holder of the share may redeem it under section 254R.

The forfeited share must then be offered for sale by public auction within 6 weeks after the call became payable.

At least 14 days, and not more than 21 days, before the day of the sale, a notice of the sale must be published in accordance with subsection (5A). The specific number of shares to be offered need not be specified in the notice and it is sufficient for the notice to be to the effect that all shares on which a call remains unpaid will be sold.

An intended sale of forfeited shares of which a notice has been published in accordance with subsection (3) may be postponed for not more than 21 days from the date of sale specified in the notice. A notice of the date to which the sale is postponed must be published in accordance with subsection (5A).

There may be more than 1 postponement but the sale cannot be postponed to a date more than 90 days from the first date fixed for the intended sale.

A notice under subsection (3) or (4) is published in accordance with this subsection if the notice is published:

unless paragraph (b) of this subsection applies—in a manner that results in the notice being accessible to the public and reasonably prominent; or

if a determination in force under subsection (5B) specifies one or more manners in which such a notice may be published—in a manner so specified.

For the purposes of paragraph (5A)(b), ASIC may, by legislative instrument, make a determination specifying one or more manners in which a notice under subsection (3) or (4) may be published.

A manner of publication may be specified in the determination only if ASIC considers that the manner of publication would result in such a notice being accessible to the public and reasonably prominent.

The share may be sold credited as paid up to the sum of:

the amount paid upon the share at the time of forfeiture; and

the amount of the call; and

the amount of any other calls becoming payable on or before the day of the sale;

The directors may fix a reserve price for the share that does not exceed the sum of:

the amount of the call due and unpaid on the share at the time of forfeiture; and

the amount of any other calls that become payable on or before the date of the sale.

The share may be withdrawn from sale if no bid at least equal to the reserve price is made at the sale.

If:

no bid for the share is received at the sale; or

the share is withdrawn from sale;

At any meeting of the company, no person is entitled to any vote in respect of the shares held by the directors in trust under subsection (9).

The proceeds of the sale under subsection (2) or the disposal under subsection (9) must be applied to pay:

first, the expenses of the sale; and

then, any expenses necessarily incurred in respect of the forfeiture; and

then, the calls on the share that are due and unpaid.

If a sale is not held in time because of error or inadvertence, a late sale is not invalid if it is held as soon as practicable after the discovery of the error or inadvertence.

If there is failure to comply with subsection (2) or (3), the company is guilty of an offence.

An offence by the company based on subsection (13) is an offence of strict liability.

For strict liability, see section 6.1 of the Criminal Code.