How you can become member of a company

In order to acquire the membership of the company, the following two elements must be presented:

The subscribers of the memorandum of a company shall be deemed to have agreed to become member =s of the company and on it’s registration shall be entered as members in the register of members.

Every other persons who agrees in writing to become a member of a company and whose name is entered in it’s register of member shall be member of the company.

In case of a company with a share capital each member shall be a shareholder of the company and shall hold at least one share .

It have been argued that in modern company law there appear to be no practical difference between being a member and a shareholder of the company.

It is instructive to note that, a person does not become a member of a company until his or her name has been entered in the company’s register of members irrespective of the fact that such a person is a shareholder in the company.

Removal of Membership

The term ‘Cessation’ means ‘Termination’. Just as there’s a process to add a member of the company, there’s a process to terminate that member. Terminating a member of the company can result in removal from the ‘Register of Members’. The following are the modes of removing a member of the company:

Transfer of Membership

Here, the shares of a member are transferred to another person by the company in the name of the transferee.

The name of the transferor is removed from the Register of Members.
After transferring all the shares from the person to another person, the person is legally removed from the company.

Transmission of Membership

On the death of a shareholder/member of the company, his/her legal heir or representative becomes a member.


This is the allocation of a specified number of shares of a company to an applicant. Upon receipt of an application, a company shall where it wholly or partially accepts the application, make an allotment to the applicant and within 42 days notify the applicant of the fact of the allotment and the number or shares allotted to him (section 125(c)).

Difference Between company Shares and Debentures

Debenture stock is borrowed money consolidated into one mass for the sake of convenience.One major advantage of debenture stock is that it is transferable into fractional amount. Each debenture stockholder is given debenture certificate showing his own part of the whole loan.

A shareholder owns a company through the purchase or acquisition of shares; a director is appointed by those shareholders to manage the operational activities of a company.

However, a shareholder can also be a director. This is very common in small companies and start-ups. In many cases, just one person will assume the role of sole shareholder and sole director.

Capacity to be a member

The following lack membership capacity.

1 A person of unsound mind and has been found by law court

2 An undischarged bankrupt

3 A corporate body in liquidation

4 person under the age of 18 years . …however, person under this category shall not be counted for the purpose of determining the legal minimum member of members of a company.

A company may become a member of another company if it is authorized by its memorandum or articles, or if it takes the shares of another company by way of a Compromise or Arrangement.

A company cannot, however, buy its own shares. Also, subject to certain exceptions given , a company cannot buy shares of its holding company.

Register of Member

Every member is enjoin to keep a register of it’s member and the register is required to contain the following particulars.

A] Address and names of the member and class of share held by each member

B] The date on which each person was registered as a member

c] The date in which any person ceases to be a member

Note : The register is required to be kept in the company’s registered


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