Definition of Member

A person whose name is entered in the register of members of a company becomes a member of that company. The register includes every single detail about the member like name, address, occupation, date of becoming a member, etc. It also includes every person who holds company’s shares and whose name is entered as the beneficial owners in depository records.

The liabilities of members are limited to the amount of shares held by them in the case of a company having share capital while in the case of a company limited by guarantee the liability of members is limited to the amount of guarantee given by them. But, in the case of an unlimited company the members have to contribute from his personal assets to pay the debts.

The members cannot take part in the management of the company, i.e. the management of the company is looked after by the Board of Directors. Although the right to appoint and remove the directors is in the hands of members.

How to become the member of a company

• If a person subscribes the memorandum of association of a company, he becomes a member by signing it.
• If a person becomes the beneficial owner of shares whose name is registered in the record of the depository, then also he becomes a member.
• If a person gets shares by way of transfer and the transfer is recorded by the company, along with the entry of the name of the transferee in the register of members.
• If a person gets shares by way of transmission and the transmission is recorded by the company along with the entry of the name in the register of members.
• If a person agrees to take the qualification shares of the company and pay for it then also he becomes a member of the company.

Definition of Shareholder

An individual who owns the share of a public or a private company is known as a ‘Shareholder.’ A subscriber of shares is not regarded as the shareholder until the shares are actually allotted to him.

The shareholders are the owners of the company, i.e. to the extent of the share capital held by them. The legal representative of the deceased member, is a shareholder, not the member, until and unless his name is recorded in the register of members of the company. Hence, it can be said that every shareholder is a member but every member, is not a shareholder.

The following are the rights of a shareholder:

• Right to transfer or sell their shares.
• Right to get the dividend.
• Right to attend the general meeting and vote.
• Right to take copies of Memorandum and Articles of Association.
• Right to receive the copy of the statutory report.