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Question
Justify the following statement.
Transfer of shares results in termination of membership.
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Solution
(1) Transfer of shares refers to the passing of ownership and possession of shares from a shareholder to another person by way of sale or gift. The shares cannot be transferred by mere delivery.
(2) The transfer of shares is affected by registering an instrument called ‘Instrument of Transfer’ with the company. When the company approves of the transfer, the Secretary strikes off (cancels) the name of the seller (transferor) from the Register of Members, and thus the membership of the shareholder who has transferred the shares is terminated.
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| Group ‘A’ | Group ‘B’ |
| a) Insane person | 1) Transfer of shares by operation of law |
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| c) Transmission of shares | 3) Cessation of membership |
| d) Surrender of shares | 4) To get copies of Auditor’s, Directors’ Report, etc. |
| e) Right of Members | 5) Can be a Member |
| 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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