In the corporate landscape of India, membership in a company holds significant importance. A member, commonly referred to as a shareholder in the case of a company limited by shares, plays a crucial role in the governance and functioning of a company. The Companies Act, 2013 governs the provisions relating to the acquisition and termination of membership in a company. This blog delves into the various modes through which an individual or entity can acquire membership in an Indian company.

Who is a Member?

As per Section 2(55) of the Companies Act, 2013, a 'member' in relation to a company means:

• A subscriber to the memorandum of the company,
• Every other person who agrees in writing to become a member and whose name is entered in the register of members,
• Every person holding shares in a company and whose name is entered as a beneficial owner in the records of a depository.

Modes of Acquiring Membership

There are several ways in which an individual or entity can become a member of a company in India. Each mode is subject to certain legal requirements and procedural compliances.

• Subscription to the Memorandum of Association: One of the primary ways of becoming a member is by subscribing to the Memorandum of Association (MOA) at the time of incorporation of the company. Such subscribers are deemed to be the first members of the company. They are required to take at least one share each (in case of a company limited by shares) and their names are automatically entered in the register of members once the company is incorporated.
   
• By Application and Allotment of Shares: A common method for acquiring membership is through the process of application and allotment. When a company issues shares to the public or through a private placement, individuals or institutions can apply to purchase those shares. Once the shares are allotted and the names of the allottees are entered into the register of members, they become members of the company.
   
• Transfer of Shares: Shares of a company (particularly a public company) are transferable. When an existing shareholder transfers his or her shares to another person, the transferee becomes a member upon completion of the necessary formalities. This includes submission of the share transfer deed, payment of stamp duty, and approval by the board of directors. The transferee's name must be recorded in the company's register of members to formalize membership.
   
• Transmission of Shares: Transmission of shares occurs by operation of law, typically due to the death, insolvency, or lunacy of a member. In such cases, the legal heir, administrator, or official assignee may become a member of the company. Transmission is not a voluntary act like transfer but is recognized under the Companies Act, provided the necessary documents (such as a succession certificate or probate) are submitted.
   
• By Acquiescence or Estoppel: In rare instances, a person may be treated as a member by estoppel, even though their name does not appear on the register of members. This occurs when a person knowingly allows themselves to be held out as a member or enjoys the privileges of membership. For example, if someone attends and votes in company meetings as a member, they may be estopped from denying membership later.
   
• Beneficial Ownership through Depositories: In the case of dematerialized shares held through depositories such as NSDL or CDSL, the depository is the registered owner in the company's records, but the actual investor is the beneficial owner. The beneficial owner is considered a member under Section 2(55) and enjoys all rights and liabilities associated with membership.

Conclusion
Acquiring membership in a company in India is a structured process governed by the Companies Act, 2013. Whether through subscription, allotment, transfer, or transmission, becoming a member entails both rights and responsibilities. With increasing investor participation and regulatory oversight, understanding these modes of membership acquisition becomes essential for anyone engaging in the corporate sector. Ensuring proper compliance and registration is key to safeguarding one's interests as a shareholder and participant in the governance of a company. freelance website designer in delhi Dabba Trading Software Developer