Q.Explain the various modes by which a person can acquire membership of a company.

The Companies Act, 2013 recognises several distinct legal routes into membership of a company, each with its own mechanics.

The Companies Act, 2013 recognises five principal modes by which a person acquires membership of a company.

First, by subscribing to the memorandum of association. Every subscriber is deemed, under Section 2(55)(i) read with Section 10, to have agreed to become a member, and is entered in the register of members automatically on the company's incorporation, without needing to apply separately or pay first.

Second, by application and allotment. This is the usual route for later investors: a person applies for shares in a public issue (Sections 23, 26, 39), a rights issue (Section 62), or a private placement (Section 42), the Board allots shares against the application, and the applicant becomes a member once his name is entered in the register.

Third, by transfer of shares. Shares are movable property (Section 44), transferable in the manner the articles provide. A duly executed and stamped instrument of transfer (Form SH-4) is delivered to the company under Section 56, and on registration of the transfer the transferee becomes a member in place of the transferor.

Fourth, by transmission of shares. This arises by operation of law, typically on the death, insolvency, or lunacy of a member, and needs no transfer instrument — only proof of title, such as a succession certificate or probate, after which the company registers the new holder. …

Students often list only 'application' and 'transfer' and forget transmission and the depository/beneficial-owner route, or confuse transfer (a vol …