MEMBERSHIP OF COMPANIES
MEMBERSHIP OF COMPANIES
1. INTRODUCTION
Any
two or more persons associated for any lawful purposes may subscribe to the
shares of the company. This maximum number of members will of course depends on
the types of companies incorporated.
The
veil of incorporation may be lifted if a company carries on its business with
less than two members – Section 36
2. SIGNIFICANCE OF BEING A MEMBER
·
Only
members or their proxies are entitled to vote at general meeting;
·
Only
members are entitled to receive dividends;
·
Members
is liable to contribute towards debts of company in event of winding up;
·
If
company have surplus assets on a winding up, members is entitled to share the
assets;
·
Member
may enforce AOA against any other members and the company;
·
Members
can petition for court remedy under Section 181;
When
does someone stop being a member of a company?
·
They
transfer their shares to another person and transferee is registered as the new
shareholder.
·
They
transfer their shares back to the company under a “buy-back”; Section 67A
·
The
shares has been cancelled by the company under a reduction of capital; Section
64
·
Partly
paid shares are forfeited when the person fails to pay a call
·
The
company is deregistered, and ceases to exist.
Case:
OWEN SIM LIANG KIM v PISAU JAYA SDN BHD & ANOR
The
A applied to the court for a remedy under Section 181. In defence, the R
company argued that the A lacked standing as his name was no longer in the
register of members when he initiated the action.
The
court held that a petitioner who applies under Section 181 must be able to
demonstrate that his name appears in the register of members at the date of the
petition.
3. REGISTER OF MEMBERS
All
companies must keep a register of their members and the register must contain
all information that is listed in Section 158(1).
This
includes:
- Names and address of
the members, number of shares held and amount paid up on the shares;
- Date on which the name
of the member was entered;
- Date on which a person
ceased to be a member for the past seven years;
- Date of allotment and
number of shares alloted to each member
The
register must be kept at the company’s registered office – Section 159(1)(a)
The
register of members is prima facie evidence of any matters inserted in that
register in accordance with the Act – Section 158(4)
The
fact that someone is a shareholder does not mean he is a member. To qualify as
members, the name must be inserted and registered in the register of members. It
is important that the name of the member be inserted in the register of members
because member will lose membership rights if the name does not appear.
MAJUJAYA HOLDINGS SDN BHD v PENS-TRANSTEEL SDN
BHD
A
member had petitioned to the court to have the company wound up. The defence
against the petition is that the member had no standing as he was no longer a
member of the company because the name had been struck out from register of
members.
The
court held that the directors of the D company could not strike out a name from
register of members without first making an application to the court for
striking out order.
Rectification
of the Register of Members under Section 162
Section
162 provides remedy to an aggrieved person when their name is purposely omitted
from the register of members. The court may summarily make an order of
rectification and may award damages to the aggrieved person.
However,
if there is serious dispute regarding title, the proceeding cannot be summarily
conducted – CENTRAL SECURITIES (HOLDING) BHD v HARON MOHAMED ZAIN [1983] 1 AC 16
4. DUTY OF A MEMBER TO A COMPANY
A
member of a company does not by reason of his position as member owe any
fiduciary duty to the company – KUWAIT ASIA BANK EC v NATIONAL MUTUAL LIFE
NOMINEES
Since
company can sue and be sued under law, a member is not liable for the debts of
the company
5. SHAREHOLDER’S RIGHTS
- Voting rights
- Distribution rights
- Rights to receive information
- Class rights (where there are
more than one class of shares)
MEMBERSHIP OF COMPANIES
Reviewed by Kamaruddin Mahmood
on
11:37:00 PTG
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