State the ways in which a person can acquire membership of a company. How can such membership be lost?

A person may become a member of the company in the following ways:

1. Subscribing to the memorandum:
Under Section 28(1) of the Act, the subscribers to the memorandum of a company shall be deemed to have agreed to become members of the company and on its registration shall be entered as members in its register of members.

2. Allotment: A person to whom shares have been allotted the company upon

application becomes a member of the company when his name is entered in the register of members.

3. Transfer: This is the purchase of shares from a will seller. A transferee of sharesbecomes a member when his name is entered in the register.

4. Transmission death: The shares of deceased member are operation of law,transmitted to his personal representative who becomes a member when his name is entered in the register.

5. Transmission bankruptcy: The shares of a member declared bankrupt acourt of law are provisions of the bankruptcy Act transmitted to his trustee in bankruptcy who becomes a member when his name is entered in the register.

6. Share qualification for directors: Under Section 182(2) of the Act, a person whohas signed and delivered to the registrar for registration, an undertaking to take up and pay for his qualification shares is deemed to be in the same position as a subscriber to the memorandum for that number of shares.

7. Estoppel: A person who is not a member may be deemed to be a member theequitable doctrine of estoppel if either:

(i) He knowingly permits himself to be held out the company as a member and third parties rely upon the representation to their detriment.

(ii) He with the company‟s knowledge holds himself out as a member and third parties rely upon the representation to their detriment.

In either case, a person is estopped from denying their parent membership as it would be unfair to third parties.

Cessation of Membership:

A person may cease to be a member in the following ways:

1. Transfer: A transferor of shares ceases to be a member when the transfer isregistered and the transferee‟s name entered in the register.

2. Forfeiture of shares: A shareholder whose shares have been forfeited for non- payment of calls and in accordance with the articles, ceases to be a member in respect of such shares.

3. Sale Company in exercise of lien:
A shareholder whose shares are sold/or otherwise disposed of the company to enforce a lien conferred upon it the articles, ceases to be a member of the company.

4. Valid surrender: A shareholder whose shares are acquired the company at hisoption ceases to be a member of the company reason of the surrender.

5. Death: The death of a shareholder terminates his membership since his shares aretransmitted to the personal representative.

6. Bankruptcy: A shareholder declared bankrupt a court of competent jurisdictionceases to be a member and his shares are transmitted to his trustee in bankruptcy.

7. Rescission of contract: If a shareholder rescinds a contract of allotment orpurchase of shares within a reasonable time, the register of members is rectified and he ceases to be a member.

8. Repudiation an infant: A contract for the purchase of shares an infant isviodable at its option during infancy or within a reasonable time after attaining the age of majority. If the contract is avoided, the infact ceases to be a member of the company.

9. Redemption of Redeemable preference shares:
A shareholder whose preference shares are redeemed, in accordance to the provisions of the Act and the Articles, ceases to be a member of the company.

10. Winding up or liquidation:
It is contended that the winding up of a company terminates the membership of all shareholders.

11. Disclaimer Trustee in bankruptcy:
If a trustee in bankruptcy disclaims the shares of an undischarged bankrupt, he ceases to be a member of the company.

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