Member: Shareholder

Normally
Member Shareholder
But what if company has no share capital?

So in general we say that all subscribers to memorandum and
those who are agree to become the member of company or
any person who has ownership of company and claim on the
assets and profits of company as owner is member of company.
Modes of becoming a member
Subscriber
Agreed to Through Transfer
To Memorandum become member of shares
Through Through
holding Shares Transmission of
shares
1. Subscriber to memorandum:
A person who signs the memorandum is called subscriber to memorandum. A
subscriber to memorandum becomes a member of company on its registration. The
subscribers are members of the company and their names must be entered in the
register of members.
2. Through holding shares:

If a company has share capital and company has allotted shares to a person, then
person becomes a member of the company when his name is registered in the
registered of members.
3. Agreed to become member:

In case of company not having share capital, a person becomes a member when he
agrees to become member of the company and his name is entered in the registered
of members.
4. Transfer of shares
A person who takes shares from a shareholder by sale or gift becomes a member
when his name is entered in the registered of members.
5. Transmission of shares:
On the death and insanity of a shareholder, shares are transferred to his legal
representatives and they become members of the company when their names are
entered in the register of members.
Termination of membership:
In simple words termination of membership is only possible when he ceases to be
shareholder of the company.
So, here is need to discuss what are the situations in which a person lost the status
of shareholder.
1. When shareholder transfers his shares through proper procedure

2. Shares allotted to shareholder are forfeited by the company; it is less likely
to happen.
3. Court has decided against a person that he cannot hold shares of a [any]
company.
4. In case of death of a person, when shares are transferred to legal heirs
5. He is declared insolvent and shares are transferred to official assignee
6. He rejects his subscription of shares due to any wrong information by the
company
7. His redeemable preference shares are redeemed
8. The listed company purchases his own shares from a shareholder
9. The affairs of the company are wound up
Rights of members:
The rights of members are as follows.
1. Copy of memorandum and articles:

The members are entitled to receive copies of memorandum and articles on
payment of amount as may be fixed by the company within 14 days of application
[section:39]
2. Alteration of memorandum and articles

The members have the right to alter the memorandum and articles of a company.
3. Variation of shareholders rights

The members have the right to vary the rights of shareholders of any class by
passing a resolution [section: 59]
4. Share certificate
The members have the right to receive certificate of shares or other securities
within 30 days after the allotment. [Section: 71]
5. Duplicate share certificate
The members have the right to receive duplicate of a certificate of shares or other
securities within 30 days of application [section: 73]
6. Transfer of shares
If member applies for transfer of shares, the company must transfer the shares in
favor of the transferee within 15 days of application. [Section: 74]
7. Issue of shares at discount

The members have the right to give approval to issue shares at discount. [Section:
81]
8. Right shares
If a company issues right shares, The members have the right to buy right shares in
proportion of existing shares held by them. [Section: 83]
9. Rectification of register
A member can apply to the court for rectification of register of members if name is
without sufficient cause entered in or omitted from the register
10. Inspection of register

The members have the right to inspect the register of members and register of
debenture holders without charges.
11. General meeting

The members have the right to receive statutory report and notice of statutory
meeting, annual general meeting and extraordinary general meeting. The members
have the right to attend the meetings of both types.
12. Meeting on requisition

The members representing not less than 10 percent of voting power have the right
to call an extraordinary general meeting by making a requisition. If directors do not
call the extraordinary general meeting, the members may call themselves.
13. Voting right

In case of company having a share capital, every member shall have votes
proportionate to the paid-up value of shares or other securities carrying voting
rights held by him
Note: on the basis of decision taken by majority of members voting right from
any class of share can be omitted.
14. Invalidation of meeting

In case of any defect in the notice or proceedings in the general meeting which
prevented members from using their rights, the members having minimum 10
percent of voting power may file a petition in the court to declare such meeting as
invalid. [Section: 136]
15. Appointment of proxy

A member entitled to attend or vote in the meeting can appoint another person as
his proxy to vote and attend in his place. [Section: 137]
16. Notice of resolution

The members having not less than 10 percent shares of the voting power can
propose a resolution for the meeting of the company.
17. Minutes of meeting

The members have the right to request for a certified copy of minutes of any
general meeting on payment of amount fixed by the company. [Section: 152]
18. Contest election of director

Any member has the right to contest for the election of director subject to the
conditions for the office of directorship. [Section: 159]
19. Election and removal of directors
The members have the right to elect directors and hold them accountable for their
acts. The shareholders can remove the directors by passing a special resolution.
20. Financial statements

Every company is required to send copies of financial statements along with
auditor’s report and chairman’s review report to the members at least 21 days
before the AGM.
21. Recommendation of auditor

A member or members having not less than 10 percent shares in the company shall
be entitled to propose any auditor for appointment.
22. Invalidation of election of director

The members having not less than 10 percent voting power in a company can make
an application to the court within 30 days of election of director for declaration of
election as invalid. [Section: 160]
23. Receive dividend

Every registered shareholder has the right to receive dividends from the profits of
the company according to the policy of company.
24. Application for investigation

The members having 10 percent voting power in the company may apply to
commission to order an investigation into the affairs of the company. [Section:
256]
25. Prevention of oppression

Members having not less than 10 percent of issued share capital of the company
may complain to the court that affairs of the company are being conducted in an
unlawful or fraudulent manner or against the interest of members and society.
26. Application for winding up
If some members collectively having share capital of at least 10 percent feel that
company is exploiting their rights and not working in the interest of minority
shareholders, so, members collectively have the right to apply to the court for
winding up of company.
27. Assets at winding up

When a company is wound up, the balance, if any, is distributed among the
members in proportion to their holding in the company
It is compulsory for each company to maintain a register of members, the
particulars of each member shall be entered in the register. In case of joint holders
of shares the register of members shall state the names of each joint holder.
Note: although the joint account shows the name of all shareholders but the
address for correspondence is always written for the first person in the joint
account.
Besides the register of members and debenture
holders every company is required to make an
index of members, if any alteration is made in the
register of members the company must make the
necessary alteration in the index of members
within 14 days.
Any company with less than 50 members is

legally not required to maintain the index of
members. Register of members is compulsory for
all companies
All the registers and indexes must be

kept with the office of registrar and must
be open for inspection for the members
at least for two hours during business
hours without any charges.
Any other person from general public can

also check make inspection of accounts
and registers but after the payment of
fee fixed by the company.
Any person can get a certified copy of

register and index within 7 days on
payment of fee.
Any person asking for the copy of register

must mention the reason of demand
along with his name and address.
In case person is company the demand of

register must be by the authorized
person.

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Normally

But what if company has no share capital?

Modes of becoming a member

2. Through holding shares:

3. Agreed to become member:

1. When shareholder transfers his shares through proper procedure

1. Copy of memorandum and articles:

2. Alteration of memorandum and articles

3. Variation of shareholders rights

7. Issue of shares at discount

10. Inspection of register

11. General meeting

12. Meeting on requisition

13. Voting right

14. Invalidation of meeting

15. Appointment of proxy

16. Notice of resolution

17. Minutes of meeting

18. Contest election of director

20. Financial statements

21. Recommendation of auditor

22. Invalidation of election of director

23. Receive dividend

24. Application for investigation

25. Prevention of oppression

27. Assets at winding up

Any company with less than 50 members is

All the registers and indexes must be

Any other person from general public can

Any person can get a certified copy of

Any person asking for the copy of register

In case person is company the demand of

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