Membership, Rights of Members and Registers
Membership, Rights of Members and Registers
The exam tests how membership arises and ends, the statutory registers, and members’ inspection and voting rights.
Core rules
- Members include subscribers to the MOA and persons whose names are entered in the register of members after allotment, transfer or transmission.
- Section 88 requires registers of members, debenture holders and other security holders. The register of members is prima facie evidence of membership.
- Section 89 deals with beneficial interest in shares held by a registered holder for another person; the beneficial owner must declare, and the registered holder exercises rights subject to the declaration.
- Members have rights to vote, receive dividends, inspect registers, requisition an EGM (10% voting power), and challenge oppression/mismanagement.
Worked example
X and Y hold shares jointly. X dies. Y, as survivor, becomes entitled to the shares by transmission; the company updates the register on proof of death. The shares are not transferred to Y’s nominee unless the articles so provide.
Traps
A transfer and a transmission are different: transmission occurs by operation of law on death or insolvency. Joint holders are treated as one member for voting, and the first-named holder’s vote is normally accepted. Refusal to register a transfer must follow Section 56 and appeal rights under Section 58. Inspection rights are not unlimited.