Who is a member of a company?
A member of a company is the subscriber to the memorandum, or any other person who agrees in writing to become a member and whose name is entered in the register of members, or a person holding shares whose name is entered as a beneficial owner in the records of a depository. Paying money, or being a director, does not by itself make a person a member.
The subscriber to the memorandum is a member once the company is registered. Any other person becomes a member when that person has agreed in writing and the name is entered in the register of members, or is entered as a beneficial owner in the depository’s records.
When does a person become a member?
Section 2(55) uses three routes. The subscriber to the memorandum is deemed to have agreed to become a member, and on registration is entered in the register of members. Every other person must both agree in writing and be entered in that register. A person who holds shares in dematerialised form is a member when the depository’s records name that person as the beneficial owner. The register itself, and how long it is kept, is on the registers page.
How many members must a company have?
A public company has at least seven members. A private company has at least two. A one person company has one. If the number falls below the minimum and the company carries on business for more than six months while the shortfall continues, every member who knows of the shortfall is severally liable for the debts contracted in that period. The members appoint and remove directors in the cases where the Act gives them that power. The directors are not the members. Who a director is is on the director page.
Who cannot simply sign up?
A minor cannot contract, so a minor cannot become a member by agreement. A company may be a member of another company when its own memorandum allows the investment. A subsidiary cannot hold shares in its holding company, except in the limited cases section 19 allows. A person resident outside India who acquires shares does so under the foreign-exchange rules that apply to that acquisition. There is no single permission that every foreign national must obtain merely to be capable of membership.
An OPC has only one member, and that member is a natural person who is an Indian citizen. How that company is formed is on the OPC page.
Frequently asked questions
Four questions cover the register, a director, a minor, and a subsidiary.
Is every shareholder a member before the register is written up?
The subscriber to the memorandum is a member once the company is registered. Any other person becomes a member when that person has agreed in writing and the name is entered in the register of members, or is entered as a beneficial owner in the depository’s records.
Is a director a member?
Not by being a director. A director manages the company. A member owns the membership. One person may be both, and many directors are not members.
Can a minor be a member?
No. Membership is a contract, and a minor is not competent to contract. A minor also cannot be the member or the nominee of a one person company.
Can a subsidiary hold shares in its holding company?
No. Section 19 stops a subsidiary from holding shares in its holding company, except for the limited cases the section itself allows, such as shares held as a trustee.
Sources
Member is defined in section 2(55) of the Companies Act, 2013. The minimum number of members is section 3. The register of members is section 88.