Secretarial Practice · Class 11 Commerce
Ch 5Members of a Company — Class 11 Secretarial Practice, concept-first.
A Joint Stock Company is a body corporate that legally exists only because real people (and, in many cases, other companies) agree to become part of it. Those people are its members — the same people the earlier chapters called "shareholders" when explaining how a company raises capital.
Key concepts
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Modes of Acquiring Membership
The Companies Act, 2013 recognises membership of a company arising in five principal ways: by subscribing to the memorandum (automatic on incorporation), by application and allotment (the ordinary route for new investors…
Most relevant Q&A
Chapter contents
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Overview
A Joint Stock Company is a body corporate that legally exists only because real people (and, in many cases, other companies) agree to become part of it.
Meaning of a Member and the Register of Members
Definition — Section 2(55), Companies Act, 2013. "Member", in relation to a company, means —
Who Can Become a Member — Capacity
As a general rule, any person who is competent to enter into a contract under the Indian Contract Act, 1872 can become a member of a company.
Modes of Acquiring Membership
The Companies Act, 2013 and standard company practice recognise five distinct routes by which a person's name comes to be entered in a company's Register of Members:
Member and Shareholder — Distinction
In everyday usage, and for a company limited by shares, the words "member" and "shareholder" are used almost interchangeably — a person who holds shares and appears on the register is both at once.
Rights, Duties, and Cessation of Membership
Rights of Members. A member's rights are usually grouped under three heads: