Cessation of membership of a company means a shareholder of a company ceasing to be entitled to all its rights as a shareholder of that company. He is no more a shareholder.
Once a person ceases to be a shareholder of a company his name is then removed from the register of members of the company in case of physical shareholding through share certificates and in case of demat holding, his name is removed from the list of beneficial owner in the records of a depository
Under different circumstances this cessation or termination of membership may happen, some of them are mentioned hereunder:
1. Buy-back of shares under Section 68 of the Companies Act, 2013, when the company purchases back the shares from its shareholders;
2. Transfer of shares by the shareholder whether with or without consideration to another person;
3. If a member dies and his nominee/heir/successor replaces him in the register of members of the company;
4. If a member becomes insolvent and his creditor(s) replaces him in the register of members of the company;
5. Non-payment of the allotment/call money on the shares held by a member resulting in forfeiture of shares by a company;
6. By the order of the Tribunal under Section 242 of the Companies Act, 2013 directing the transfer of shares of a member to another member or the company;
7. If the company exercises lien on shares of a member in accordance with the articles of association;
8. In the case of winding up/dissolution of the company or strike off of name of the company.