Which capital of the company is reduced due to the forfeiture of shares?

Reserve Capital Paid-up Capital Authorized Capital Capital reserve

Paid-up Capital

On forfeiture, we need to cancel the shares and to that extent, reduce the Share Capital. The amount received by the company is not refunded. Till the time the company re-issues the forfeited shares, it adds the balance of the Forfeited Shares Account to paid-up capital under Subscribed Capital in the Notes to Accounts on ‘Share Capital’.