Q."A person may be member but may not be a shareholder." Explain.

Membership depends on being entered in the register of members, not on holding shares — so a person (e.g. a member of a guarantee company with no share capital) can be a member without being a shareholder.

The words 'member' and 'shareholder' are usually used together, but they are not identical. A member is a person whose name is entered in the register of members of the company. A shareholder is a person who owns/holds shares of the company. Because of this distinction, a person may be a member but not a shareholder in situations such as:

1. Company limited by guarantee without share capital — such a company issues no shares. The persons who join it and whose names are on the register are its members, yet they hold no shares, so they are members but not shareholders.
2. Subscriber to the memorandum before allotment — a subscriber becomes a member on incorporation by virtue of signing the memorandum and being entered on the register, even before shares are formally allotted to him.
3. Company with no share capital in general — any company that has members but issues no shares will have members who are not shareholders. …