Methods of Acquiring Membership of a Company

Methods of Acquiring Membership of a Company

Acquiring Membership of a Company 

• By subscribing to the MOA of the company before its registration. (Statutory members) “Deemed to be members from the date of the incorporation of the company without any allotment of shares and without any entry in the register of members.” He acquires full status of a member on the registration of the company with all rights and liabilities. The subscriber to the Memorandum must take the agreed number of shares directly from the company and must make the payment in cash.
• By agreeing with the company to take shares and being placed on the register of members. (Two conditions must be fulfilled – written agreement to take the shares and the person name to appear on the register of members)
• By acquiring qualification shares ( By the directors who have signed and delivered to the registrar a written undertaking to take qualification shares and to pay for them becomes members of the company and they are treated as if they are subscribers to the MOA.)
• By taking a transfer of shares and being placed on the register of members. (This can be done by sending an instrument in writing to the company completed in all respect and when the name of the transferee is entered in the records of the company he becomes a member.)
• By transmission of shares (In transmission of shares, the ownership of shares passes to the legal representative of the deceased member by operation of law. In the case of transmission there is no need of any instrument of transfer only the willingness to becoming a member of the legal representative is required.)
• By registration on succession to a deceased or bankrupt member.
• By allowing his name apart from an agreement to become member to be on the register of members.

Termination or cessation of membership-

• When he transfers his shares.
• When his shares are validly forfeited by the company.
• When he makes a valid surrender of his shares to the company.
• When his shares are expropriated.
• When his shares are sold by the company under power in its Article to enforce a lien.
• When he is holding redeemable preference shares which are being redeemed. When he dies and his shares are passed on to his legal representative.
• When he is declared insolvent and his shares are passed on the Official Receiver.
• When ha has been issued share warrant in exchange of fully paid-up shares and Article of the company do not recognize the holders of share warrants as members.
• When the company is being wound up, but he remains liable as contributory and is also entitled to his share in the surplus assets, if any.