PROVISION FOR

MEMBERSHIP


Presented by,
ANU SAJI
T2, MBA
Roll No: 12
 WHO CAN BECOME A MEMBER ?

Any person who is competent to contract of the Indian
contrast may become a member of a company. This is subject
to the provision of the memorandum and the article of the
company. The article may provide that certain persons cannot
become member of the company.
 HOW TO BECOME A MEMBER ?
(cont.)

 MEMBER OF SUBSCRIPTION:- The subscribers of the
memorandum of association of a company are demined to have
agreed to become it member in the register of member
Sec41(1).Neither application nor allotment of shares is necessary.

 MEMBERS BY APPLICATION AND REGISTRATION:-

Apart from the subscribed of memorandum, every other person
who agrees in writing to become a member and whose name is
entered in the register of member is by the Company’s Act 1960
 HOW TO BECOME A
MEMBER ? (cont.)

 MEMBERS BY QUALIFYING SHARES :- The
Company Act 1956 does not require directors to hold any
share at all. If article of association of a company require a
person to hold qualification shares then he can be
appointed as the director only if he takes or sign an under
taking to take and pay for the qualification share Sec 29(1)
(b) he thus become a member of the company is
Sec(266(2))
 RIGHTS OF MEMBERS

 Statutory right:- These are the rights which are conferred
on the member by the company act. These rights cannot
be taken away or modified by any provision in the
memorandum or the article.

 Documentary right:- These are the right given to the

member by the memorandum and article of association.
 RIGHTS OF MEMBERS (cont.)

 Legal right :-These are the right given to the member by
the general law.

 Proprietary right :-The right to participate rateably in

dividend distribution when ordered in the discretion of the
directors.

 Remedial right :-The right to information and inspection

of company record.
 LIABILITY OF MEMBERS

 The liability of the member of a company depends on the nature of
the company.

 Company with unlimited liability:- Each member is liable in full for all
the debts contracted by the company during the period he was a member.
 Company limited by shares:- Each member is liable to pay the full
nominal value of the share held by him. If he has already paid a part of
the amount on the shares his liability is limited to the unpaid amount on
the shares in respect of which he is a member.
 Company limited my guaranty:- Each member is liable to contribute
the amount guarantee by him to be paid in the event of winding up of the
company.
 TERMINATION OF
MEMBERSHIP

A person shall cease to be a member of a company
when his name is removed from the register of member for
a valid reason.
The name of a member may be removed from the
register of members under any of the following situations :
 TERMINATION OF
MEMBERSHIP (cont.)

 1.) When a member transfers all his shares to another person and
the transfer is registered in the company, his name shall be
removed.

 2.) When his shares have been validly forfeited, surrendered or sold
by the company to enforce its lien for unpaid calls, the membership
of the membership of the member ceases.

 3.) When the shares have been surrendered by the member, he shall
cease to continue as a member of the company. At times, the
existing members are unable to make a payment of unpaid value of
shares . Therefore they decide to surrender the shares held by them
and get rid of their liability.
 TERMINATION OF
MEMBERSHIP (cont.)

 5.) When any member dies, his shares are transmitted to his
legal representatives who become the company after their
names are entered in the register of member.

 6.) If a member becomes insolvent, and his shares are

transferred by the Official Assignee or are registered in his
name or are disclaimed by him as property.

 7.) When the members rescinds the contract of membership on

the ground of fraud or misrepresentation or a mistake in the
prospectus.
 TERMINATION OF
MEMBERSHIP (cont.)

 8.) When member of a company which is in the process of
winding up, and the liquidator disclaims the shares under
Sec 535 of the Companies Act.
