Question

Justify the following statement.

Members of company are entitled to several rights.

Answer 1

The rights of a Member of A Company:

(1) Right of accessing books and documents: The members have a right to receive (get) the copies of Memorandum of Association. Articles of Association, Auditors’ and Directors' Reports, Balance Sheet and Profit and Loss Account. They have a right to inspect Register of Members, Register of debenture holders, Register of charges and investments and copies of annual returns, Minutes book of all general meetings, and proxies lodged for general meetings.

(2) Right to make fundamental corporate decisions: The members have exclusive rights and powers to make fundamental corporate decisions on the issues like
(1) Change of Registered office of the company
(2) Change of objects of the company
(3) Increase in Authorised capital
(4) Change or amendment of Articles of Association
(5) Acquisition, merger and take over by the company
(6) Appointment of sole selling agents and
(7) Winding-up of the company.

(3) Right to participate in General Meetings: The members have the right to receive notices, agendas, and circulars of all general meetings. They also have the right to attend general meetings. or appoint proxies, vote on resolutions and proceedings in person or by proxy, to demand and vote at a poll, demand to call extraordinary general meetings, etc.

(4) Right to appoint and remove a director: The members have the right to hold annual general meetings and extraordinary general meetings to elect and remove directors by way of voting rights.

(5) Right with respect to the company's accounts and its audit: The members have the right to approve and adopt annual accounts and auditors’ report in annual general meetings. They also have the right to appoint or re-appoint auditors of the company, decide their remuneration, and to remove the auditors.

(6) Right to participate in the profits of the company: The members have the right to approve dividends and share dividends declared by the directors and get the dividend within 30 days of its declaration in the annual general meeting.

(7) Shareholding Right: The members have a right to receive a share certificate from the company within the specified time. They also have the right to transfer shares. To get the Rights issue and Bonus issue shares.

(8) Right to receive surplus assets: The members have the right to share the surplus assets of the company (after the settlement of all dues payable to stakeholder) at the time of the Winding up of the company.

(9) Right to class action suit: The members jointly have the right to file a suit against the company or its directors in an appropriate court of law for mismanagement, misappropriation of money, corruption, or any fraudulent; the unlawful or wrongful act or omission or misleading statements in the Audit report. The shareholders holding 10% of voting rights or any 100 members jointly can apply to the tribunal for redress. They also have a right to demand investigation in the affairs of the company. If a situation arises they have the right to file a petition for winding-up (closing down) the company.