To function entirely for a company, it needs a wise leader, a perfect plan and skilled workers. A leader with strong leadership qualities has to guide the company on the success path.
By function, an organisation consists solely of various workers to describe typically. The workers with the same thoughts in their minds have to follow their leader’s footpath to accompany them on the journey. The success of a perfectly plotted plan depends upon its exhibition in action. Even though the leader is in the decision-making, workers are also allowed to put forward their opinions and consider them worthy enough. More experienced workers are given honors with promotions. Above all, a company can’t succeed without the worker’s contribution. So, it is safe to say that workers are the core part of an organization that works smoothly. Let us know about the Membership in a Company in detail.
Who Is a Member?
A company member is a person who agrees to become a part of the company by entering their name in the list of registered members, that is, the ‘Register of members’. The person designated to become a member should have to accept the norms as a part of the company. They also tend to hold the shares of the company under their names. In a limited company, those who own shares are called members. But in an unlimited company, those people who have liability claims in the company’s debts are the members.
Members are different from shareholders in some aspects. For example, shareholders own a part of the company while the members do not. Members are appointed in a company that is stated accordingly in the Companies Act 2013. However, shareholders are not listed in the act. Each company should have a minimum number of members and shareholders limited to their shares. You may officially become a company member once you sign the memorandum with the appropriate details.
Membership in the Company
According to the Companies Act 2013, those who agreed to include their name under the company’s list of members by signing the memorandum are the rightful members of the organization. The people who are members of a company will be provided with a membership card as a token of proficiency for their acceptance. After you accept to become one of the members of the company, there are some official steps to be taken care of.
To complete the process of acquiring membership in a company, the following two elements are essential to be presented:
- An agreement is to be signed for membership acceptance.
- The relevant person’s name is in the ‘Register of members’.
Modes of Acquiring Membership
Considering the imprinted in the Companies Act 2013, the membership of a company can be acquired in the following ways:
- Subscribing to the memorandum.
- Written agreement.
- Shareholding.
Subscribing to the Memorandum
Memorandum is a paper of agreement that clearly defines a member’s role and liabilities. A memorandum acts as a tool for accepting weapons for the members. By accepting the memorandum, they pledged to become a company member. Their names are enrolled in the Register of members as a completion of the process.After that, if the members want to own shares in the company, they will become the shareholders.
Written Agreement
In the company management, everything depends upon the agreement basis. You must strictly follow the company rules and sign the agreement for each decision. To become a company member, you must sign the written agreement as a memorandum to show your acceptance.
The same goes for your shareholder prospects too. There are four ways to this aspect:
- Application and allotment: To become a member, you must apply for the company’s shares. Notice of allotment gives your acceptance, and your name will be entered into the list of members.
- Transfer of shares: It is another way of acquiring membership by acquiring shares with other existing members to enrol your names in the Register.
- Estoppels: If you are obliged to enlist as a company member without definite cause, the person may be estopped to deny his membership.
Shareholding
You can become a member when your anime is entered under the company’s beneficial owner. In this case, you need not submit the written agreement for membership acceptance.
Rights and Liabilities of a Membership
Liability is the state of accepting being responsible for something by accepting your role. The company’s members also have some liabilities in pursuing their membership. The liabilities are the person’s responsibilities in an organization.
Some of the particular responsibilities the members have to sustain are:
- You should make deals if the law allows.
- You can pay due shares if you want.
- You should follow the majority’s decision.
- It would be best if you contributed to the company’s assets.
For completing your work with utter determination, you are gifted with certain rights to enlighten your authority over the company:
- You are given rights to access documents and other account details.
- Rights to make fundamental decisions for corporate dealings.
- As a member, you have the right to participate in general board meetings.
- You have the right to appoint new directors.
- You have given the right in the company’s profit participation.
- You can oppose any mismanaging decisions and other wrongdoings.
Removal of Membership
The termination of membership is the process of officially removing their name from the ‘Register of members’. It is not a simple process but acquires principle changes in the member’s list.
The following are the ways of removing one’s membership from the company:
- Transfer of membership: One of the standard methods of removing a member from the company. You can transfer your shares to your preferred person. After transferring the shares, your name will be removed from the registered member of the company.
- Transmission of membership: It slightly differs from the above mode of membership removal. In this mode, your membership will be transferred to your future descendant.
- Surrender of membership: The membership can also be removed by submitting your part shares to the company with the board acceptance report.
- Forfeiture of membership: It is unfortunate for a member to lose their share over something. Also, your membership card will be terminated if they claim to sell their share.
Conclusion
Membership in a company is a crucial prospect for maintaining the company’s shares and transactions. Members are the company’s assimilators of dealings and decisions. You can learn more about the company’s membership qualities and other essential criteria. Vakilsearch provides excellent knowledge about the membership details in a company. To clear your doubts, read the above passage and search Vakilsearch for more credentials.
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