Forfeited Share


DEFINITION of 'Forfeited Share'

A share in a company that the owner loses (forfeits) by failing to meet the purchase requirements. Requirements may include paying any allotment or call money owed, or avoiding selling or transferring shares during a restricted period. When a share is forfeited, the shareholder no longer owes any remaining balance, surrenders any potential capital gain on the shares and the shares become the property of the issuing company. The issuing company can re-issue forfeited shares at par, a premium or a discount as determined by the board of directors.

BREAKING DOWN 'Forfeited Share'

In certain cases, companies allow executives and employees to receive a portion of their cash compensation to purchase shares in the company at a discount. This is commonly referred to as an employee stock purchase plan. Typically, there will be restrictions on the purchase (i.e. stock cannot be sold or transferred within a set period of time after the initial purchase). If an employee remains with the company and meets the qualifications, he or she becomes fully vested in those shares on the stated date. If the employee leaves the company and/or violates the terms of the initial purchase he or she will most likely forfeit those shares.

  1. Employee Stock Option - ESO

    A stock option granted to specified employees of a company. ESOs ...
  2. Equity

    Equity is the value of an asset less the value of all liabilities ...
  3. Shareholder

    Any person, company or other institution that owns at least one ...
  4. Employee Stock Ownership Plan - ...

    A qualified, defined contribution, employee benefit (ERISA) plan ...
  5. Stock

    A type of security that signifies ownership in a corporation ...
  6. Forfeiture

    The loss of any property without compensation as a result of ...
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