Forfeited Shares in Australia: 2026 Investor Guide

Forfeited shares refer to company shares that are taken back by the issuing company after a shareholder fails to meet specific obligations—typically failing to pay the full amount due on their shares. This scenario most often arises when shares are issued on a 'partly paid' basis, a structure still used by some Australian public companies.

Here’s how forfeiture typically unfolds:

• The company issues a 'call' for payment on partly paid shares.

• A shareholder doesn’t pay the required amount by the deadline.

• After due process (including reminders and a final notice), the company’s board resolves to forfeit the shares.

Once forfeited, the shares revert to the company. The previous owner usually loses any rights or claims on those shares, and the company may reissue or sell them to recover unpaid amounts.

In early 2026, the Australian Securities and Investments Commission (ASIC) introduced new disclosure requirements for listed companies around share forfeiture. These updates are designed to protect retail investors and ensure transparency about their risks and obligations when holding partly paid shares.

Key policy highlights include:

• Mandatory Disclosure: Companies must now clearly disclose the risks of forfeiture in prospectuses and shareholder communications.

• Shortened Notice Periods: The Corporations Act 2001 has been amended to allow companies to give shorter notice before forfeiture—down from 42 days to 30 days—provided clear warnings are given.

• ASX Listing Rule Updates: The ASX now requires companies to report forfeiture events promptly and detail any resales of forfeited shares.

Forfeited shares are particularly relevant in 2026 as several mining and fintech firms have raised capital using partly paid shares, and a tighter economic climate means more investors are missing payment deadlines.

Consider the recent case of Lithium One (ASX: LIO), which issued partly paid shares in its 2024 capital raising. When market conditions tightened and share prices dipped, dozens of retail investors failed to pay their final instalment. The company, following ASIC and ASX rules, provided written reminders before ultimately forfeiting over 200,000 shares in March 2026. The shares were later auctioned to institutional buyers, and original holders lost both their shares and any amounts already paid.

Potential consequences for shareholders include:

• Loss of Investment: Forfeited shareholders lose both their shares and any paid-up capital, with no compensation.

• Credit Implications: Some companies may pursue former holders for unpaid calls if resale proceeds don’t cover the outstanding amount.

• Missed Upside: If the company’s fortunes improve after forfeiture, the original holders miss out on future gains.

For companies, forfeiture can help maintain a clean shareholder register and ensure fair treatment for all investors, but it also poses reputational risks if not handled transparently.

With the 2026 rules in effect, investors should:

• Read all prospectus materials and shareholder updates for details on payment schedules and forfeiture clauses.

• Set reminders for call payment deadlines—especially if you hold shares on a partly paid basis.

• Contact your broker or the company directly if you anticipate difficulties meeting a call.

• Monitor ASX announcements for any updates about forfeiture policies or upcoming calls.

Australian investors should also remember that forfeited shares are most common in new capital raisings and certain sectors (mining, resources, and small-cap tech). Staying informed and proactive is your best defence.