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
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-
- Minor himself
- Partnership firm
- Hindu Undivided Family (HUF)
Can be a Member
- Karta of HUF / partners
- Individual partners
- 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).
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.