By going through these Maharashtra State Board Secretarial Practice 11th Commerce Notes Chapter 5 Members of a Company students can recall all the concepts quickly.

Maharashtra State Board Class 11 Secretarial Practice Notes Chapter 5 Members of a Company

Maharashtra Board Class 11 Secretarial Practice Notes Chapter 5 Members of a Company

Meaning of Member-

  • Member means a person whose name is entered in the Register of Members of Company and also includes holder of equity shares as per the records of Depository.
  • Two pre requisites for person to be a member.
    • agreement in writing to take shares of company.
    • registration of the person so agreeing in Register of Members of the Company.

Member v/s Shareholder-

(i) Member without being a shareholder

  • Signatories to the Memorandum of Association
  • Company Limited by Guarantee Amount
  • Membership by Acquiescence / Estoppel
  • Transfer of shares
  • On death of a Member / By Succession / Transmission of shares
  • On Insolvency of a Member.

(ii) Shareholder without being a Member

  • The transferee (Buyer of the Shares)
  • Official Receiver in case of insolvency, Legal heir in case of death

Eligibility Of Membership-

1. Cannot be a Member-
I. Individual

  • Minor himself
  • Insolvent
  • Insane

II. Organisation:

  • Partnership firm
  • Hindu Undivided Family (HUF)

Can be a Member

I. Individual

  • Foreigner
  • Karta of HUF / partners
  • Individual partners

II. Organisation:

  • Company
  • Co-operative Society
  • Limited Liability Partnership (LPP)
  • Registered trust

Acquisition of Membership (One can become member of the company).

  • By subscribing to the Memorandum
  • By application and allotment of shares
  • By holding Shares in Dematerialized form
  • By transfer
  • By transmission of shares
  • Nominee of One Person Company (OPC)
  • By Acquiescence

Cessation / Termination of Membership (A person ceases to be the member of company)

  • Transfer of Shares
  • Death or insolvency of a member
  • Sale of Shares by the member in buy back offer
  • Forfeiture of Shares
  • Surrender of Shares to company
  • Exercising of lien over the Shares of a member
  • Redeemable Preference Shareholders on redemption of Preference Shares
  • Person who rescinds(cancel) the contract of membership on the ground, he/she was cheated
  • Winding up of the company

Rights of a Member-

(1) Rights of accessing Books and Documents:

  • To get copies of Memorandum and Articles of Association, Auditor’s and Directors reports, Balance Sheet, Profit and Loss account.
  • To inspect Register of Members, Debenture-holders, etc.

(2) Right to make Fundamental Corporate Decision:

  • Change of Registered office of Company
  • Increase in Authorized Capital
  • Change of objects of the company
  • Amend Articles of Association
  • Acquisitions, Mergers and Takeovers
  • Appointing Sole – Selling agents
  • Winding up of the Company

(3) Right to Participate in General Meetings:

  • To receive the notice and agenda of all general meetings
  • To appoint proxy, vote at meetings
  • To call Extra Ordinary General meeting, etc.

(4) Right to appoint and remove a Director

(5) Right with respect to Company’s accounts and its audit:

  • To approve the annual accounts at the Annual General Meeting
  • To appoint auditors
  • To remove auditors

(6) Right to Participate in Profits of the company:
To approve dividend and get the same within 30 days of its declaration

(7) Shareholding Rights:
To receive share certificate, transfer of shares, Rights Issue and Bonus Issue of shares

(8) Right to receive Surplus Assets:
To get share in surplus assets of company (if any), in event of liquidation of company

(9) Right to Class Action Suit:

  • against company or its directors
  • in the event of any fraudulent, unlawful or wrongful act or omission
  • misleading statements in the audit report

Duties and Liabilities of a Member-

  • to abide all the contents of Articles of Association.
  • to pay full value of shares issued.
  • liable for all debts of the Company (Unlimited Liability Company).

Word Meaning:

eligibility – necessary requirements; acquisition – to obtain; cessation – to end; depository – institution where shares are held in electronic form; interchangeable – similar; acquiescence – agreement; estoppel – by any previous law; misrepresents – giving a false details; refuting – rejection; succession – in continuation; deceased – death; transmission – to pass on; insolvency – financially loss incurred by individual or company(liabilities more then assets); sui-juris – legally capable; insane/lunatic – mental imbalance; render – to provide / to give; dematerialized – convert shares from physical form to electronic form ; insanity – mentally ill; administrator – a person who carries out administers or manage the business; forfeiture – to cancel; redeemable – to repay; rescinds – to cancel; fundamental – basic; fradulent – cheating; tribunal – a body formed to solve disputes; redress – to solve; acquired – to obtain; conferred – to give; convenants – contents; accumulated – collected; transferee – a person on whose name the shares are transferred.