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08-26-2012, 09:04 PM
Q. In what different ways a person becomes a member of a company and ceases to be a member of a company. (1998)
1. Introduction:
A company is defined as a voluntary organization which is an artificial person created by law, having limited liability of its members and a perpetual succession with its capital divided into transferable shares and which has a common seal.
Prof L. H. Haney:
Company is an artificial person created by law having separate entity with a perpetual succession and common seal.
2. Characteristics of a company:
Following are the main characteristics of a company.
(i) It is a voluntary association.
(ii) It is an artificial person.
(iii) it has a separate legal entity.
(iv) Liability of its member is limited.
(v) Ownership and management are in two different hands.
(vi) The shares of the company are freely transferable.
(vii) It has a common seal.
(viii) It has perpetual existence.
3. Types of Companies:
Companies are of three types which may be registered under the companies ordinance 1984.
(a) A company limited by shares is one in which the liability of its member is limited to the extent of face value or the amount of their shares.
(b) A company limited by guarantee is one in which each member given a guarantee to contribute a specified sum to the company in event of its being wound up.
(c) Unlimited company is third type. it is a company in which the liability of shareholder is unlimited as in an ordinary partnership.
4. Share holder:
Member of company is called share holder.
5. Different ways for becoming member of a company:
Following are the different ways in which a person can become member of a company.
I. Membership by subscription:
All person who subscribe their name to the memorandum are deemed to the members of the company. such share holders must take their shares direct form company and pay calls duly made on them.
II. Membership by application:
A person may become shareholder of a company by filing an application to the company. the application is regarded as offer form the applicant and the acceptance is communicated to the application by giving him a notice of allotment.
(a) Revocation of application:
The applicant can revoke his application before the notice of allotment is put in course of transmission to him.
(b) Types of application:
I. Simple:
There is on condition in simple application.
II. Conditional:
If there is any condition, the allotment must be made on the basis of conditions specified.
III. Membership by transfer:
A person can become member of a company by transfer of shares. the shares of a company are moveable property and freely transferable. so by transfer of shares a person can become shareholder or member of a company.
IV. Membership by succession:
The heirs of a deceased shareholder or the official assignee become entitled to be members in place of a deceased or an insolvent.
V. Membership by acquiescence or estoppels:
A person may be deemed to be a member of a company if he allows his name to be on the register of member or otherwise holds out as a member. the liability arises form his assent to remain on the register and he is estopped form denying that he is registered with his consent.
6. Ways to cease to be a member:
A person may ceased to be a member in one of the following ways:
I. By transfer of shares:
A shareholder who transfers his shares to another person is ceased to be member of the company.
II. Forfeiture of shares:
If shares of the member are forfeiture then, he is ceased to be member of the company.
III. Surrender of shares:
By valid surrender of shares a member may cease to be member of the company.
IV. Sale by company:
By sale the company in existence of its lien over his shares a person may be ceased to be member.
V. Death of share holder:
By the death of the shareholder, his shares would be transmitted to his personal representatives.
VI. Insolvency of shareholder:
In case of insolvency of shareholder, he may be ceased to be member of the company:
VII. Winding up of company:
On winding up of the company a member is ceased to be shareholder of the company.
VIII Rescission of the contract:
On rescission of the contract of membership on the ground of misrepresentation or mistake a person may be ceased to be member of the company
7. Conclusion:
To conclude i can say that, company is a voluntary association formed by people to carry on a certain business for profit. there who contribute their capital in the forms of shares are shareholders of the company. there are no qualification for membership prescribed by the companies ordinance 1984. the provisions of contract act are applicable.