Meaning and Definition of a Member

Under the Companies Act, 2013, the word 'member' has a precise legal meaning that goes beyond simply holding a share certificate. Section 2(55) of the Act defines a member of a company as any of the following persons: (i) the subscriber to the memorandum of association of the company, who is deemed to have agreed to become a member and, on the registration of the company, is entered as a member in its register of members; (ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members; and (iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.

Three elements run through this definition and must all be satisfied before a person is legally recognised as a member of a company: (a) an agreement to become a member — express, as in an application for shares, or implied, as with a subscriber to the memorandum; (b) entry of the person's name in the company's register of members (or, for dematerialised holdings, in the depository's records); and (c) in most cases, a shareholding, though a company limited by guarantee without share capital can have members who hold no shares at all.

For students of Gujarat board Std 12 Secretarial Practice, the practical significance is this: mere possession of a share certificate, or even paying for shares, does not by itself make a person a member. It is the act of registration — the company actually entering the name in its statutory register — that completes membership of a company in the eyes of the law.