ShareholderShareholderOrOrMemberMember

SHARE CAPITALSHARE CAPITAL•Amount of capital raised by the issue of shares•Members are liable to pay difference between reduced and nominal value.

AUTHORISED CAPITAL

ISSUED CAPITAL

SUBSCRIBED CAPITAL

CALLED UP CAPITAL

RESERVE CAPITAL

KINDS OF SHARE CAPITAL

UNCALLED CAPITAL

PAID UP CAPITAL

REDUCTION OF SHARE REDUCTION OF SHARE CAPITALCAPITALTo ensure that the company’s assets are

not freely distributed to the shareholders It is done to:

1. Write off lost capital2. To pay off surplus capital

PROCEDURE:Authority of articles must be securedSpecial resolutionPetition to the CourtRegistration

METHODS OF REDUCTION METHODS OF REDUCTION

According to Section 100 of the Companies Act:

1.Reduce liability of members on shares not fully paid up

2.Write off lost capital3.Pay off excess paid-up share

capital

Distinction between Distinction between shareholder and Membershareholder and MemberShareholderShareholder MemberMember

A company limited by guarantee or an unlimited company having no share capital will not have shareholders

A company limited by guarantee or an unlimited company having no share capital will have only members

A holder of a share warrant is a share holder

A holder of a share warrant is not a member

A person who has transferred his shares ceases to be a holder of those shares as from date of transfer

A person continues to be a member till such time the transfer is registered in the name of transferee in books of the company

A legal representative of a deceased member becomes a shareholder immediately on death of member

A legal representative of deceased is not a member until he gets his name entered in register of members

Methods of becoming a Methods of becoming a membermemberBy allotmentBy subscribing to the

memorandumBy agreeing to purchase

qualification sharesBy transferBy transmission or successionBy principal of estoppel

Who may become a Who may become a member?member?A Company may become a

member of another companyHindu undivided family Partnership firm cannot become

a member of a companyJoint holders :shares can be held

jointly

Rights and Liabilities of Joint Rights and Liabilities of Joint HoldersHolders

•Re. Issue of share certificate: The co. shall not be bound to issue more than 1 certificate, and delivery of a certificate to 1 of several joint holders shall be sufficient. •Re. Liability of calls•Re. Transmission of shares: •The survivor(s) if the member was a joint holder•Legal representatives if the member was a sole holder.

CONT…….CONT…….

• Re. Voting power: The vote of the senior who tenders a vote shall be accepted to the exclusion of the votes of the other joint holders.

• Re. Payment and receipt of dividends, etc. : Any dividends, interest or other money is addressed to:• The registered address of the holder• The registered address of that one of joint holders

who is first named on the register of members• Such person & such address the holder(s) may in

writing direct

Termination of MembershipTermination of Membership•When he transfers his shares and the transfer is duly registered•By forfeiture of shares for non payment of calls, if articles so provide•By a valid surrender of shares. It involves no legal formalities•When the co. sells the shares by giving a 14 days notice to debtor shareholders•When the shareholder dies and his shares stands transmitted to his legal representative, upon registration of the shares in the successor’s name

CONT……CONT……

• When he is declared insolvent & Official Assignee disclaims shares

• By repudiating the contract of membership because of misrepresentation in prospectus or because of irregular allotment

• By conversion of share certificate into share warrant

• By redemption of redeemable preference shares

• By resorting to “buyback of own shares”• On the dissolution of the company

RIGHT OF MEMBERSRIGHT OF MEMBERS Right to alter MOA and AOA Right to get copies of documents

MOAAOABalance sheetResolution and AgreementsMinutes of proceeding of General MeetingTrust Deed •Right to inspect certain registersRegister of member and IndexRegister of debenture holder

CONT…….CONT…….

Register of all investment Copies of all annual returns Minute books of general meeting

Right to receive share certificate , dividend , bonus shares

Right to attend general meeting , voting right

Right to demand general meetingRight to apply to the Company Law Board In case of mismanagement If company refuse to register the transfer

of shareFor calling extraordinary general meetingFor investigation of companys affair

REGISTER OF MEMBERSREGISTER OF MEMBERS

It is necessary under section 150 Amendment Act , 1997 CONTENT OF REGISTER

Name , address, occupation

About share held by member

Date of enter in register

Date at which person ceased to be a member

IMPORTANCE OF REGISTERIMPORTANCE OF REGISTER Guarantee of creditors Evidence of truth of content

INDEX OF MEMBERSINDEX OF MEMBERSFor companies having more than

50 membersAlterations in the Register of

MembersMust be kept alongside Register

of MembersMust contain indications that

enable quick findings in the Register

PLACE OF KEEPING THE PLACE OF KEEPING THE REGISTER OF MEMBERSREGISTER OF MEMBERSAt the Registered Office of the

CompanyCan be located elsewhere by

passing of a Special ResolutionMust be open to inspection for

atleast 2 hours a dayA copy of the Register can be

purchased on payment of Rs.1 for every 100 words

CLOSURE OF REGISTER OF CLOSURE OF REGISTER OF MEMBERSMEMBERS• After giving a 7 day notice by advertisement in a local daily ,

no transfer of shares can take place when the Register is closed.

• Necessary in the cases of a General Meeting, Declaration of Interim Dividend

• Incase of “Listed Companies”, the Register will be closed once during the year

• RECTIFICATION OF REGISTER OF MEMBERS

• Power for rectification lies with the Company Law Board under Section 111(4)

• Application for Rectification can be made on the following grounds :

• Name of any person is entered without sufficient cause• Name of any person after being entered is omitted• Delay in entering the fact that a person ceases to be a member• Company refuses to register the transfer of shares

FOREIGN REGISTER OF FOREIGN REGISTER OF MEMBERSMEMBERS• Any company, authorized by it’s articles, shall keep a

“Foreign Register” at any place outside India for those resident members.

• Must file with the Registrar a notice within 30 days, incase of any change , it must notify the Registrar about the same

• Noncompliance of the above conditions would result in fines .

Provisions regarding Foreign Register under Provisions regarding Foreign Register under Section 158Section 158

1. To be deemed a part of the Principal Register.2. Subject to inspection, closure and other restrictions.3. A “Duplicate Copy” must be maintained at the Registered

Office.4. Transfer to any other “Foreign Register” incase of

discontinuation.5. Decision of the judiciary of the foreign country shall have

the same force with regard to Rectification.

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