Member in a company

Most students of the company law are feeling that word members and shareholders are synonyms to each other. Usually both these words are used for each other but it’s not correct from the law’s perspective.

There’s a minor difference between these two. First of all, the shareholder is not accepted as the company’s member until his name is supported in the register of the company members. Second, any shareholder is not going to be in a company that has a liability limited by guarantee. The person who establish the company and whose names are supported in the register of the Company’s members are accepted as its members.

Members and Company Membership- Section 41 of the Companies Act, 1956 provides the following definition of the Member- People who sign the Board-Memorendum of a Company are accepted as a member of the Company and after registration of the Company, their name is retained in the registration of members like the Members’ Name of the Members. [Section 41(1)]

The signs presented in the above said that the definitions of the member are called as a test of membership.

Testing of Membership – According to section 41 – Anytime under the definition of Members, they can be submitted as follows –

(1) Membership by memorandum – this is the last chapter through which some persons sign it and are supported in the register of their name members.

(2) Membership by application – Individuals who have submitted applications to purchase qualified shares and this proposal has been accepted by the Company. The existence of proposal and acceptance is contracted only in relation to shares between the Company and the person and then that person is accepted as a member of the Company.

(3) Subscription by transmission or transfer of shares- can become a member after promise to one person.
obtaining shares by entering a company. Share is a moisture property he can buy in the market.

(4) Consent-memberment to the legal successor – an individual may also become a member by terminating as a successor or receiving shares of bankrupt member.

(5) Membership by ‘unreasonable acceptance’ or ‘proven estopel’ – a person is accepted as a member of the Company if he has no objection to retain his name in the Register of the Company. If someone’s fault name is supported in the company’s register and such a person gives his consent to retain his name in the register, the liability of such person becomes like a member. The intention of the above description is that a person is accepted as a member in accordance with Estopel’s implicit approval or theory.

In all these cases an individual will not become a member until his name is supported in the members’ register.

Efficiency in Membership – an immature or mental person cannot be a member of the Company as membership produces the contract and is not capable of an immature or mental person contract according to the Indian Contract Act, although allocation of shares can be done in the name of a lymphot but the name of his successor is supported in the registration of members. Being immature she doesn’t have any obligations. After mature, he may resign from membership if he is ready or as the remaining member he should be liabilities like other members.

Differences between member and shareholder – the following differences between member and shareholder are-

(1) Shareholder is the person who holds the share but the member is the person whose name is supported in the registration of the members.

(2) Although the shareholder owns the shares but does not hold the post of the member but members have got both, ownership and subscription status of the shares.

(3) In case of death or bankruptcy of a shareholder his representative immediately becomes the shareholder of the Company whether his name is not in the registration of the Members, but in the case of death or bankruptcy of the Company member, his legal heir does not automatically subscribe but in order to submit the application to the Company by him.

(4) The carrier of that share warrant cannot be incorporated into the Company’s members which is issued by the Company under Section 144 means that although the carriers own the share warrant being but generally not the member. [Section 2(27)]

Subscription Termination – The Company’s membership expires in the following terms-

(1) Due to the seizure of shares- If the share holder does not pay unpaid amount towards shares held by him, on the call, and after warning by the company makes no effort in this regard then by a resolution the director may seize his shares and terminate his membership.

(2) Due to the transfer of shares- If a shareholder relocates his part to someone else and receives the name of the Transfer Name in the Members’ Register, Transferr shall not remain as a Member of the Company and his membership shall expire.

(3) Due to his death or if the interdisciplinary has been terminated – in the case of death of a member or his subscription has been terminated, the company automatically terminated.

(4) Due to the legitimate surrender of their shareholders of their shareholders sometimes get unable to pay the unpaid amount of their shares even on calls, return their shares to the company and thus separating themselves from the subscription of the company.

In case of surrender of shares, the company itself will ensure if the surrender of shares by the current member is not being made to protect itself from the liability of the company.

(5) If the roastable preference shares are cashed – If the current member of the company is holding the re-reversed shares of the company then after unaware of these shares he will be deprived of membership of the company.

(6) If he cancels the contract of membership—if the current member of the company proves the charge of false statement in Prospectus against the company in court and on this basis he does not accept the subscription of the company then he will be able to relieve the membership of the members who have signed the memorandum of the company, cannot get rid of the membership of the company by canceling this agreement.

(7) When the company is wounding—if a company is wounded, its members will rid them of the company’s membership, but this does not mean that they will get relief from the liability of the share holders.

(8) If his shares are sold by the Company – If the shares of a Member are sold by the Company to another person, then the name of that Member is supported in place of that Member. Thus he will be free of membership of the member company.

(9) If his shares are purchased by a court order – if under section 402, a company or some other members of the company buy shares of a person as per court order, then that member loses membership of the company.