MEMBER OF A COMPANY

State with reasons whether any of the following can become member of a company:

(i) a minor, (ii) a foreigner, (iii) a partnership firm, and (iv) a company.

The Companies Act does not specifically lay down as to who can become a member of the company. It also does not prescribe any disqualification for

any person which would debar him from becoming a member of the company. In Section 41, the Act only provides that every person who agrees in writing

to become a member of a company may become a member. Thus, for becoming a member, the essential requirement is an agreement in this regard. As

such, the provisions of the Indian Contract Act, 1872, will he the guiding principle in deciding who can be a member. According to Section 10 of the Indian

Contract Act, every person is competent to contract who is of the age of majority, who is of sound mind and is not disqualified from contracting by any law

to which he is subject. Therefore. any person who is competent to contract can be a member of a company The capacity of certain persons to become

member of a company may be discussed as wIder:

1. A Minor. A minor is not competent to become the member of a company because ‘an agreement with a minor is absolutely void (Mohiri Bibi Vs.

Dharamodas Ghose, (1903) I.L.R. 30 Ca!. 539]. A minor, being

incompetent to enter into a contract, cannot he allotted shares of a company. “If directors, in ignorance of the fact of minority, allot shares to a minor, and

enter his name on the register of members, the company can repudiate the allotment and remove his n:Jme from the register, when the fact of applicant’s

minority comes to its knowledge. The minor can also repudiate the allotment at any time during his minority. In either case, the company

must repay to a minor all the money received from him in respect of the allotted shares, and whether or not the minor should restore to the compan

the benefits he might have derived from the shares would be for the court to decide in view of the facts and circumstances of each case.”!

In case of transfer of partly-paid shares to a minor, the company may refuse to register him as member.

In case of fully paid up shares, a minor’s name (through his lawful guardian) may be entered in the register of members, if he (or she) happens to acquire

the share by way of transfer or transmission. The Company Law Board held invliss Nandita .lain Vs. Bennet Coleman and Co. Ltd., that a minor, acting

through his or her guardian, can be admitted as a member of a company limited by shares by means of transfer or transmission of shares in hisher name

provided the shares in question are fi1l1y paid-up. The Company Law Board has again held in Saroj (minor) through her

father & naturul guardian s.L. Bagree and Mrs. Tara Devi Bagree v..,.. Britannia Industries Ltd., that there can be no objection to fully paid-up shares being

transferred to a minor and such transfer being registered in favour of the minor, if he (or she) is properly represented and acted by a lawful guardian.