Correspondence with Members — Meaning, Importance and Occasions

1. Correspondence with Members — Meaning, Importance and Occasions

Meaning: "correspondence with members" means the written communication a company — drafted and issued by, or under the authority of, the Company Secretary — addresses to the persons who hold its shares, in their capacity as members, on matters that arise from that shareholding itself (allotment, calls, transfer, dividend, and so on). It is distinct from correspondence with directors, banks, debenture-holders or depositors, each of which is its own stakeholder relationship studied elsewhere in the Maharashtra HSC Secretarial Practice syllabus.

Why this correspondence matters:

• Legal necessity. Several letters to members are statutory requirements, not courtesies — a return of application money under Section 39, or the transfer of a long-unclaimed dividend to the IEPF under Section 124, must be carried out and evidenced in a prescribed manner and time.
• Evidence and record. A signed, dated letter (of allotment, of a call, of regret with refund) is the company's documentary proof that it has dealt fairly and lawfully with the money and the rights its members have entrusted to it.
• Investor relations and goodwill. A member's only direct experience of the company is very often the correspondence the Secretary sends — prompt, accurate and courteous letters build the confidence that keeps existing members holding their shares and attracts fresh capital in future issues.
• Protection of members' money and rights. Because members have paid real money for their shares (and, in the case of unallotted applicants, are simply owed it back), the correspondence directly protects their financial interest.

Common occasions on which the Secretary corresponds with members (each is taken up in more detail later in this chapter):

1. Allotment of shares — informing a successful applicant of the shares allotted.
2. Call on shares — demanding an unpaid instalment on partly paid shares.
3. Regret for non-allotment — informing an unsuccessful (or partially successful) applicant, with a refund of the application money not adjusted towards allotment.
4. Bonus shares — intimating the allotment of shares issued free out of the company's reserves.
5. Rights shares — offering existing members further shares in proportion to their present holding.
6. Transfer and transmission of shares — acknowledging a transfer deed lodged by a member, or registering a transmission on death/insolvency.
7. Payment of dividend — intimating the dividend declared and despatching the dividend warrant. …