Define a ‘member’. Distinguish him from a shareholder

Every company is composed of members, though it is a distinct

legal person existing independent of its members. Generally speaking the members of a company are the persons who, for the time being, constitute the

company as a corporate entity. The term ‘member’ has been defined by Section 41 ofthe Companies

Act and thereby ‘member’ means

(i) The subscribers of the Memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall

be entered as members in its register of members.

(ii) Every other person who agrees in writing to become a member of a company and whose name is entered in its register of members. shall be a

member of the company.

(iii) Every person who holds equity share capital of the company and whose name is entered as a beneficial owner in the records of the depository, shall

be deemed to be (‘ member ofthe company. [Inserted by the Depositories Act, 1996].

Member and Shareholder. A shareholder is a person who holds the share of the company. The teml ‘member’ and ‘shareholder’ are used interchangeably

as they arc synonymous, but a member is not necessarily a shareholder. In case of a company limited by shares the members are also the shareholders

of the company; but a company limited by guarantee and an unlimited companies may exist without share capital and therefore, may have no

shareholders. Conversely, the bearer of a share. warrant is a shareholder but is not a member, because his name is struck out from the register of

members. Moreover, a person may be a holder of share by transfer but would not become a member until the transfer is registered in

the books of the company and his name is entered in the register ofmembers.