1. Shareholder
or
MeMber

2. SHARE CAPITAL
•Amount
of capital raised by the issue of shares
•Members are liable to pay difference between reduced and
nominal value.
KINDS OF SHARE
CAPITAL
AUTHORISED ISSUED SUBSCRIBED CALLED UP UNCALLED
CAPITAL
CAPITAL
CAPITAL CAPITAL
CAPITAL
PAID UP
CAPITAL
RESERVE
CAPITAL

3. REDUCTION OF SHARE
CAPITAL
 To
ensure that the company’s assets are not freely
distributed to the shareholders
 It is done to:
1.
2.
Write off lost capital
To pay off surplus capital
PROCEDURE:
 Authority of articles must
 Special resolution
 Petition to the Court
 Registration
be secured

4. 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 capital
3. Pay off excess paid-up share capital

5. Distinction between shareholder
and Member
Shareholder
Member
A company limited by guarantee or an A company limited by guarantee or an
unlimited company having no share
unlimited company having no share
capital will not have shareholders
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

6. Methods of becoming a member
By
allotment
By subscribing to the memorandum
By agreeing to purchase qualification
shares
By transfer
By transmission or succession
By principal of estoppel

7. Who may become a member?
A
Company may become a member of
another company
Hindu undivided family
Partnership firm cannot become a
member of a company
Joint holders :shares can be held jointly

8. Rights and Liabilities of Joint Holders
•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.

9. 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

10. Termination of Membership is duly
•When he transfers his shares and the transfer
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

11. 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

12. RIGHT OF MEMBERS
 Right to alter MOA and AOA
 Right to get copies of documents
MOA
AOA
Balance sheet
Resolution and Agreements
Minutes of proceeding of General Meeting
Trust Deed
•Right to inspect certain registers
Register of member and Index
Register of debenture holder

13. 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 meeting
Right to apply to the Company Law Board
 In case of mismanagement
 If company refuse to register the transfer of share
 For calling extraordinary general meeting
 For investigation of companys affair

14. REGISTER 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

15. IMPORTANCE OF REGISTER
Guarantee of creditors
 Evidence of truth of content


16. INDEX OF MEMBERS
For
companies having more than 50
members
Alterations in the Register of Members
Must be kept alongside Register of
Members
Must contain indications that enable
quick findings in the Register

17. PLACE OF KEEPING THE
REGISTER OF MEMBERS
At
the Registered Office of the Company
Can be located elsewhere by passing of a
Special Resolution
Must be open to inspection for atleast 2
hours a day
A copy of the Register can be purchased
on payment of Rs.1 for every 100 words

18. CLOSURE OF REGISTER OF
MEMBERS
• 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
•

19. FOREIGN REGISTER OF MEMBERS
•
•
•
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 Section 158
1.
2.
3.
4.
5.
To be deemed a part of the Principal Register.
Subject to inspection, closure and other restrictions.
A “Duplicate Copy” must be maintained at the Registered
Office.
Transfer to any other “Foreign Register” incase of
discontinuation.
Decision of the judiciary of the foreign country shall have the
same force with regard to Rectification.

20. THANK
YOU