Members In Company Flashcards
To understands rule relating to members
Can a person deny he is a member of the company even though his name is in the register of members?
A.register of member is a prima facie evidence of the truth of its content .
accordingly, if a person is ,to his knowledge is there in the register of members of a company he shall be deemed to be a member and onus lies on him to prove that he is not member by giving appeal to tribunal.
Case law M.F.R.D Cruz
Explain m f r d cruz case law
The plaintiff apply for 4000 shares in the company but no allotment was made to hit. 4000 shares were transferred to him without his request and his slave was entered in the register of members. Reply interview it took the step for rectification of the member the company went into liquidation and he was liable for the contributory .
the court held that if person known that his is name was included in the register of shareholders at he stands by and allow his name to remained he is holding out to the public that he is a shareholder and there by bye he lost his right to have his name removed
Foreign register
Sec 88(4) Every company has to maintain and keep the register of foreign members or debenture holders or other security holders or beneficial owners residing outside India . foreign registers contain the names and particles of the members, debenture holder, the security holders, beneficial holders residing outside India
Penalty; if a company failed to maintain a register of members of debenture holders or other security holders company and every officers of the company who is default shall be punishable with fine it shall not be less than 50000 but not more than three lakh and where the failure continues rs.1000 everyday
maintenance of foreign registers?
1# should be kept in the same manners of principal registers
2# duplicate of such registers maintained in R O of India
3# within 30 days from the date of the opening /change /discontinuance of F.R , file MGT-3 along with fees
4#in case of discontinuance of keeping the registers entries in shall be transferred to some other foreign registers kept by company outside India or to the principal registers
5#in case of the need for rectification the decision of appropriate competent authority in regard of rectification
WHAT TO MEAN BY BOOK
CLOSURE?
Section 91 of the Companies,2013
periodic closure of R O M &Transfer books the company
cannot open for more than 30 days at once and 45 days in a year
the listed company shall give notice by paper ad at least 7 days before
penalty : C & O in D 5,000 for every day to maximumof 1,00,000.
sec 88(4)
The company shall– (a) transmit to its registered office in India a copy of every entry in any foreign register within fifteen days after the entry is made; and
(b) keep at such office a duplicate register of every foreign register duly entered up from time to time.
Preservation of Register
(Rule 15 of Companies (Management and Administration) Rules, 2014
company R.O.M -
permanently and shall be kept in the custody of the company secretary of the company or any other person authorized by the Board for such purpose
and the register of debenture holders or any other security holders along with the index - 8 years from the date of redemption of debentures or securities, as the case may be, and shall be kept in the custody of the company secretary of the company or any other person authorized by the Board for such purpose.
DECLARATION BY PERSONS NOT HOLDING BENEFICIAL INTEREST IN ANY SHARE
sec 89 it obligatory on the part of a person, whose name is entered in the register of members of a company as the holder of a shares in that company but who does not hold beneficial interest in such shares to make a declaration to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares in MGT-4 Section 89(2) of the Act, makes it obligatory for any person who, holds or acquires beneficial interest in a share of a company to make a declaration to the company specifying the nature of his interest, the particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed in MGT-5
Section 89(3) of the Act, states that where any change occurs in the beneficial interest in such shares,shall make a declaration within thirty days, from the date of such change to the company
Section 89(6) of the Act, makes it obligatory on the part of the company to make a note of such a declaration in the register concerned and to file within thirty days from the date of receipt of declaration by it, with the Registrar of Companies, a return in the form MGT-6
Penalty that if any person fails, to make a declaration as required, he shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.
who is significant beneficial owner?
means an individual referred to in subsection (1) of section 90,who acting alone or together ,or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, namely:
(i) holds indirectly, or together with any direct holdings, not less than 10% of the shares;
(ii) holds indirectly, or together with any direct holdings, not less than 10% of the voting rights in the shares;
(iii) has right to receive or participate in not less than 10% of the total distributable dividend ,or any other distribution, in a financial year through indirect holding alone, or together with any direct holdings;
(iv) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone.
definition of member
section?
According to Section 2(55) of the Companies Act, 2013, member, in relation to a company, means,
(1) The subscribers to the memorandum of a company who 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) Every other person who agrees in writing to become a member of a company and whose name is entered in its register of members shall, be a member of the company;
(3) Every person holding shares of a company and whose name is entered as a beneficial owner in the records of a depository shall be deemed to be a member of the concerned company.
acquiring membership
(a) by subscribing to the Memorandum of Association (deemed agreement); or
(b) by agreeing in writing to become a member:
(i) by making an application to the company for allotment of shares; or
(ii) by executing an instrument of transfer of shares as transferee; or
(iii) by consenting to the transfer of share of a deceased member in his name; or
(iv) by acquiescence or estoppel.
by holding shares of a company and whose name is entered as beneficial owner in the records of a depository
Minor as member:
e.g., a minor, is wholly incompetent to enter into a contract and as such cannot become a member of a company. Consequently, an agreement by a minor to take shares is void ab-initio.
an agreement in writing for a minor to become a member may be signed on behalf of the minor by his lawful guardian and the registration of transfer of shares in the name of the minor, acting through his or her guardian, especially where the shares are fully paid cannot be refused on the ground of the transferee being a minor [Miss Nandita Jain v. Benett Coleman and Co. Ltd.,
CESSATION OF MEMBERSHIP
(a) He transfers his shares to another person, the transfer is registered by the company and his name is removed from the register of members;
(b) His shares are forfeited; (c) His shares are sold by the company to enforce a lien;
(d) He dies (his estate, however, remains liable for calls);
(e) He is adjudged insolvent and the Official Assignee disclaims his shares
; (f) His redeemable preference shares are redeemed; (g) He rescinds the contract of membership on the ground of fraud or misrepresentation or a genuine mistake;
(h) His shares are purchased either by another member or by the company itself under an order of the Tribunal under Section 242 of the Companies Act, 2013;
(i) The member is a company which is being wound-up in India, and the liquidator disclaims the shares;
(j) The company is wound up
Expulsion of a Member
an article in AOA for expulsion of a member is opposed to the principles of the company jurisdiction is illegal and is ultra vires the company
Any assumption of the power by the Board of Directors to expel a member by amending its articles of association is illegal and void
Bajaj Auto Ltd. v. N.K. Firodia
Article 141 of the Constitution,
the law declared by the Supreme Court is binding on all courts within the territory of India, any provision pertaining to the expulsion of a member by the management of a company which is against the law as laid down by the Supreme Court will be illegal and ultra vires. In the light of the aforesaid position,
it is clarified that assumption by the Board of directors of a company of any power to expel a member by amending its articles of association is illegal and void
REGISTER OF MEMBERS
(1) Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely:–
(a) register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India;
(b) register of debenture-holders; and
(c) register of any other security holders.
(2) Every register maintained under sub-section (1) of section 88 of the Act shall include an index of the names included therein.
(3) The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the purposes of this Act.
(4) A company may, if so authorised by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register referred to in sub-section (1) of section 88 of the Act, called “foreign register” containing the names and particulars of the members, debenture-holders, other security holders or beneficial owners residing outside India.
