Who exactly is a member of a company?

So, Who Can Become a Member?

Almost anyone! Here’s a quick rundown:

• Individuals (including minors through a guardian, in some cases)

• Companies (yes, companies can own other companies)

• Partnership firms (through a partner acting on behalf of the firm) • Trusts or legal representatives (in special circumstances)

Private companies can put limits on who can become a member, but in general, it’s a pretty open club.

How Do You Actually Become a Member?

There are a few diverse ways this can happen. Some are obvious, some a bit less so.

1. By Subscribing to the Memorandum

This one is for the founders. If you helped form the company and signed its official founding document (the Memorandum of Association), congratulations—you are automatically a member from day one.

2. By Applying for and Being Allotted Shares

This is the standard route. You apply for shares, the company approves and gives (or “allots”) them to you, and your name gets entered in the register. Done—you are a member.

3. By Transferring Shares

Let us say your friend owns shares in a company and wants to sell them to you. Once the company approves and registers the transfer, and your name is in the book, you become a member.

4. By Transmission (No, Not Like a Virus)

This happens when shares move to someone automatically—like when a shareholder dies or is declared insolvent. The legal heir or representative can request to be registered, and once that’s done, they are a member.

5. Buying Shares Through the Stock Market

If the company is public, you can just buy shares on the stock exchange. Once the transaction clears and your name is recorded (digitally, via a depository), you become a member.

6. Being a Beneficial Owner (in Demat Form)

If you are holding shares in dematerialized (paperless) form, your depository account shows you as the beneficial owner. And yes, that makes you a member.

7. By Court Order

In rare cases, someone may have a legal right to be a member—maybe their name was wrongly removed from the register, or they weren’t added in the first place. A court can step in and fix that.

Wait… Is a Member the Same as a Shareholder?

Here is where it gets interesting.

In most cases, yes—they are the same. But not always.

They are the Same When:

You own shares, your name is in the register, and you have all the rights and responsibilities of a member.

They are Different When:

• You own shares, but the company has not yet updated its records. So technically, you are a shareholder, but not a member yet.

• You have signed the Memorandum but have not received your shares yet.

• In companies without share capital (like some nonprofits or guarantee companies), you can be a member without holding any shares at all.

What Rights Does a Member Have?

Being a member is just not owning a piece of the pie—it comes with power and perks:

Financial Rights

• Share in the profits (dividends)

• Share in remaining assets if the company winds up

Voting Rights

• Vote on company matters at general meetings

• Elect or remove directors (depending on shareholding)

Access to Information

• Get notice of meetings

• Access key company documents and financials

Legal Rights

• Take action if something shady is going on (e.g., mismanagement, fraud)

• Apply for winding up of the company in serious cases

And What About Responsibilities?

Yep, there are a few:

• You may have to pay any unpaid amount on your shares (if not fully paid).

• Follow the rules in the company’s Articles of Association.

• In some companies (like those limited by guarantee), you promise to contribute a certain amount if the company goes under.

How Do You Stop Being a member?

You can leave the club in a few ways:

• Sell or transfer your shares

• Your shares are forfeited (for example, if you do not pay what is due)

• The company buys back your shares

• You die (then transmission rules apply)

• The company shuts down

Once your name is removed from the register, you are no longer a member.

Different Companies, Different Member Rules

Membership can look a little different depending on the company type:

• Private Company: Limits the number of members (usually to 200) and restricts share transfers.

• Public Company: No cap on members; shares are freely transferable.

• Company Limited by Guarantee: Members do not own shares—they agree to contribute a certain amount if the company winds up.

• One Person Company (OPC): Only one member allowed!

So now you are well informed to start a company of your own or even join one as a member in one.