Q.Explain the duties and liabilities of a member of a company.

Membership of a company is not only a source of rights — the Companies Act, 2013 imposes real duties and, in specific situations, liability beyond the ordinary limited-liability protection.

The Companies Act, 2013 balances the rights of membership of a company with corresponding duties and liabilities.

Liability to pay calls. The chief liability of a member of a company limited by shares is to pay, when the Board makes a call, any amount remaining unpaid on the shares he holds, up to their nominal value. Once shares are fully paid up, this liability is exhausted, and the member owes nothing further to company creditors in the ordinary course — the essence of limited liability under Sections 2(55) and 2(22).

Liability of a guarantee member. For a member of a company limited by guarantee, liability is not tied to shares but to the fixed amount he has undertaken, in the memorandum, to contribute if the company is wound up.

Duty under the statutory contract. Section 10 makes the memorandum and articles binding on every member as though he had personally signed and covenanted to observe them, so a member's ordinary duty is simply to comply with these constitutional documents and with resolutions validly passed under them.

Duty of disclosure. Under Section 89, where a member's registered shareholding is actually held on behalf of another person (a nominee arrangement), both the registered holder and the real beneficial owner must file declarations disclosing the true position, so the register cannot be used to hide real ownership.

Duty to keep records current. A member should notify the company of changes of address and cooperate in producing share certificates for endorsement when required by a transfer or transmission. …

A common mistake is stating that a member 'has no liability at all' once shares are fully paid, overlooking the narrow but real exceptions of past-mem …