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How can a Person become Member (shareholder) of Company?

The following are various modes and methods through which a person can acquire the membership of a company. Acquiring membership, in simple words, means becoming a shareholder of the company.

Refer: Section 2(55) of the Companies Act, 2013.

Conditions

A person will be considered as a member of a company only when he satisfies the following two important conditions:

1) In case of physical share certificates:
The name of the person must be entered in the "register of members" of the company.

2) In case of shareholding in demat account:
The name of the person must be entered as a beneficial owner in the "records of a depository".


Methods

A person can become a member of a company in the following ways: 

i. by subscribing to the memorandum of association (his name gets entered in the register of members) (this happens during incorporation of the company);

ii. by holding shares in demat form (his name gets entered as a beneficial owner in the records of a depository);

iii. by agreeing in writing to become a member; (his name gets entered in the register of members).

When a person agrees to become a member?
i. by making an application to the company for allotment of shares, or
ii. by executing an instrument of transfer of shares as transferee, or
iii. by consenting to the transmission of shares of a deceased member in his/her name; or
iv. by acquiescence or estoppel and on his name being entered in the register of the members of the company.


Nominee of Member of an OPC

In case of a One Person Company, the nominee whose name is mentioned in the memorandum becomes the member, in the event of death of the one and only member of the company. [Ref: Section 4(1)(f) of the Companies Act, 2013]

Comments

  1. ramakant suryawanshi19 August, 2018

    I wanted to know how to become a shareholder of a company. Thank you for providing the information.

    ReplyDelete

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