Meaning of Member
A member of a company is a person who holds shares in the company and whose name is entered in the Register of Members. Members are also referred to as shareholders, especially in companies limited by shares.
📖 Section 2(55) of the Companies Act, 2013 defines a “member” as:
- A subscriber to the Memorandum of Association (MOA)
- A person who agrees in writing to become a member
- A beneficial owner whose name is entered in the Register of Members
🧾 Who Can Be a Member?
- Individual persons (including minors through guardian)
- Companies, LLPs, and other corporate bodies
- Foreign nationals or non-resident Indians (NRIs)
- Firms (in special cases, through partners)
- Trustees or legal representatives
🔹 How is Membership Acquired?
Membership in a company can be acquired in the following ways:
- ✍️ By Subscription to the Memorandum of Association (MOA):
Persons who sign the MOA at the time of incorporation automatically become members. - 📤 By Application and Allotment of Shares:
A person applies for shares and the company allots them.Once the name is entered in the Register of Members, they become a member. - 🔁 By Transfer of Shares:
When shares are transferred from an existing member to another person, and the company registers the transfer, the transferee becomes a member. - 📜 By Transmission of Shares:
In case of death or insolvency of a shareholder, legal heirs or representatives may become members through transmission. - 🤝 By Acquiring Shares in Demat Form:
In listed companies, investors buying shares in dematerialized form through depositories like NSDL/CDSL become members automatically.
🔻 How is Membership Terminated?
A person ceases to be a member in the following cases:
- 1. 🔁 Transfer of Shares:
If the member sells or transfers all his shares and the transfer is registered, membership ends. - 2. 🪦 Death of Member:
On the death of a member, his name is removed, and legal heirs may become members. - 3. 💼 Forfeiture or Surrender of Shares:
If a company forfeits shares for non-payment or if shares are surrendered, the member loses membership. - 4. 🧑⚖️ Insolvency or Bankruptcy:
An insolvent person may lose membership when shares are vested with the official assignee. - 5. 🧾 Redemption of Preference Shares:
Preference shareholders cease to be members upon redemption of shares. - 6. 🏢 Winding Up of Company:
On dissolution, all memberships automatically terminate.
📌 Conclusion:
A member is the foundation of a company’s ownership structure. The process of acquiring and terminating membership is well-defined under company law to protect both the company’s and shareholders’ interests. Understanding membership rules helps in ensuring smooth transfer, registration, and exit of ownership in any corporate setup.