Explain the following Term/Concept.
Eligibility of Membership
(1) The membership of a company is based on the written agreement between the member and the company. Since the membership is based on agreement (i.e. contract), it is necessary that the person must be competent to contract according to the provisions of the Indian Contract Act, 1872. Under Section 11 of the Contract Act, every person is competent to contract, who is of the age of majority and who is of sound mind and is not disqualified from contracting by any law to which be subject.
(2) Subject to the provisions of the Companies Act, Memorandum and Articles of the company any person is eligible to become a member of the company as follows:
(a) Individuals: A minor, insolvent, and insane/lunatic are not eligible to become a member. A foreigner can be a member of the company subject to provisions of FEMA. 1999.
(b) Organisation: Company, Co-Operative Society, Limited Liability Partnership. Karta of Hindu Undivided Family (HUF) and individual partners of a Partnership firm are eligible for membership in a company.