What are the different modes of acquiring membership?

Answer 1

As person can be a member of a Company bye the following modes or you can say circumstances.

In present day corporate scenario there are five different modes of acquiring membership in a company, they are as under:-

1. By Subscribing to Memorandum

2. By application and allotment

3. By Transfer

4. By Transmission

5. By Undertaking to take qualification Shares

A brief explanation of the above modes are as follows.

1. By Subscribing to Memorandum:

A subscriber to the Memorandum becomes a member on the registration of the Company even though there is no application for shares or allotment.

2. By application and allotment:

An application for shares is an offer to take shares. Allotment is acceptance of that offer of the company. When shares are allotted to an applicant, he becomes a member.

There is prescribed punishment for those who makes an application in fictitious name to a company for acquiring shares or subscribing any shares to a term which may extend to five years imprisonment. This is to avoid shareholding in the names of fictitious or non existing persons.

3. By Transfer:

When a person who purchased the shares from the open market, applies to register his name in the company register of the original share holder and when his name is entered in the register of members, he becomes a member by transfer.

4. By Transmission:

When a Share holder is dead and his legal heirs applies for registering their names and when the company entering their name, they become members of the company.

5. By Undertaking to take qualification Shares:

A Director who signed an undertaking to take ans pay for the qualification shares is also in the same position as Subscriber of Memorandum.

The above are the five modes of acquiring membership of a company under the Companies Act 1956.