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Question
Justify the following statement.
Member and Shareholder are interchangeable terms.
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Solution
(1) According to the procedure under the Company Law, the name of a person who has been allotted shares (Le. a shareholder) has to be entered in the Register of Members. Thus, he becomes a member of the company. It is for this reason that the two terms ‘member’ and ‘shareholder’ are interchangeably used to mean the same person. However, this is true in the case of (i) a company limited by shares, (ii) a company limited by guarantee and having a share capital, and (iii) an unlimited company having a share capital.
(2) But in the case of a company limited by guarantee without share capital and an unlimited company without share capital, a member is not a shareholder. Thus, a member may or may not be a shareholder and Vice versa. A person who subscribes to the Memorandum of Association may not have been allotted any shares. He is a member but not a shareholder. A shareholder who has transferred his shares ceases to be a shareholder but continues to be a member till the transfer 15 registered. Thus, a person may be a member without being a shareholder, or he may be a shareholder without being a member.
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RELATED QUESTIONS
Select the correct answer from the options given below and rewrite the statement:
When a person buys shares of a company by filling up an application form, the person becomes a member by _________.
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____________ means a person ceases being a member of the company of membership.
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| Group ‘A’ | Group ‘B’ |
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| 6) To attend a board meeting | |
| 7) Duties of member | |
| 8) Surrendering all assets to the company | |
| 9) Demand or claim money from the company | |
| 10) Transfer of shares by order of Secretary |
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Member of the company is conferred with several rights.
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A person whose name is entered in the Register of Members of a company is called __________
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Subscribers to Memorandum of Association are the first members of the company.
Justify the following statement.
Nominee of the member of OPC becomes its member of the death of the member.
