Hi ...

I hope you are having a pleasant day.

In today's newsletter, I will be sharing with you some ideas on how to become a Member of a company.

Basically, there are only two ways of becoming a member of a registered company...

One is by subscribing to the Memorandum and Article of Association of a Company.

Second is by agreeing in writing to become a member of the company.

For the first category, at the point of registration, all the directors who subscribed to the memorandum are deemed to be members of the company.

After a company has been incorporated, their names would be entered as registered members of the newly formed company.

In the case of the second category...

A person who wants to become a member of a company after it has been incorporated will do so by applying in writing to become a member of the company.

And this is validated by acquiring a part of the shares of the company.

When this is done, your name must be registered in the register of members too so as to authenticate your membership.

Apart from the initial subscribers of the memorandum and article of association of a company, every other person acquires the status of a member through any of the following ways.

(A) BY ALLOTMENT Once a person applies in writing to become a member or shareholder, the company is required to send a letter of allotment of shares to the applicant if it accepts the proposal, the allotment is based on the number of units of the share capital that the prospective member has applied for.

(B) BY TRANSFER Unless the company's article provides otherwise, an existing member or shareholder may validly transfer his shareholdings in he company to any person of his choice and the directors have no power to refuse such transfer.

Although in most cases a clause in the company's article may require the shareholder seeking to transfer his shares to first offer them to existing directors, members or existing shareholders before transferring to an outsider.

This is called the Pre-Emption Clause.

(C) BY TRANSMISSION. Transmission of shares occurs when a personal representative of a deceased member acquires or inherits the shares in the company.

The personal representative must however present either a letter of administration or a probate letter to the company depending on whether or not the deceased member died intestate.

(D) DIRECTORS' QUALIFICATION SHARES. Sometimes a company may be registered at first with just 2 directors (which is the minimum number required during the registration) and later decide to increase the number of directors.

In such a case, the appointed director may be required by the article of the company to submit to the CAC an undertaking for Director's qualification shares. In other words, a company may by its article require that every subsequent director should take up shares in the company and notify the CAC of such undertaking.

In any of these cases, one thing remains constant...

A person only becomes a member of a company when his name is written in the register of members of that company.

Every member must have at least one share in the company's capital.

Unless the company has no share capital, such as a company limited by guarantee.

Is your company duly registered? Or do you wish to register it?

Is your name duly registered as a member of the company(s) you are part of?

Do you keep, maintain and update your company's register of members?

Do you wish to acquire shares in a company?

Do you understand how the share capital of your company works?

If you have any questions, or concerns or need help, reply to this email and we will take it up from there.

To your #legalsense.

-Barinaada.