Company law???

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Querist : Anonymous (Querist)

16 July 2013 What is the difference between director and member and shareholder?

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013 Hi

Meaning of 'Director'

Section 2(13) of the Companies Act, 1956 defined a term director and states that 'director' includes any person occupying the position of director, by whatever name called.
In the ordinary sense a director is someone who administers, controls or directs something, especially a member of a commercial company; one who supervises, controls or manages; a person elected by the shareholders of a company to direct company's policies; person appointed or elected according to law, authorised to manage and direct the affairs of a company

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013
Definition of member — section 41

All the subscribers of the Memorandum of Association shall be deemed to have agreed to become members of the company and on registration of a company shall be entered as members in the Register of members.
Section 2(27) of the Companies Act, 1956, provides, that a "member", in relation to a company, does not include a bearer of a share-warrant of the company issued in pursuance of section 114.
Section 41 deals with definition of member which provide as under:—
(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 holding equity share capital of a company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company.

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013
Shareholder v Member

Shareholder means a person who hold the shares by having his name on the register of members. [Wala Wynand Mining Co. 52 LJ CH 88: 21 CH D 849; Howrah Trading Co. v CIT AIR 1959 SC 775] but in Kedar Nath Agarwal v Jay Engineering Works Ltd. (1963) 33 Comp Cas 102, a single judge of Calcutta High Court decided that where shares are transferred by a member, the transferee, though not yet registered in the books of the company would be a 'member' and the 'holder' and it was also observed by the learned judge that a 'member' shall be a 'holder' of shares, but a 'holder' may not be a 'member'. However, in 1974, a Division Bench of the Calcutta High Court in CWT, West Bengal III v Smt. Sumitra Devi Jalan 96 ITR 35, held that Art.19 of the Table A, says that the transferor shall be deemed to remains a holder of the shares until the name of the transferee is entered in the register of members in respect thereof. So, a person to be a member has to hold shares and the name of such person has to be entered on the register of members, kept by the company pursuant to section 150 of the Companies Act, 1956 and such company obviously must be a company limited by shares, or by guarantee but having a share capital or an unlimited company where capital is held by indefinite shares.

Shareholder v member
Shareholder means a person who hold the shares by having his name on the register of members. [Wala Wynand Mining Co. 52 LJ CH 88: 21 CH D 849; Howrah Trading Co. v CIT AIR 1959 SC 775] but in Kedar Nath Agarwal v Jay Engineering Works Ltd. (1963) 33 Comp Cas 102, a single judge of Calcutta High Court decided that where shares are transferred by a member, the transferee, though not yet registered in the books of the company would be a 'member' and the 'holder' and it was also observed by the learned judge that a 'member' shall be a 'holder' of shares, but a 'holder' may not be a 'member'. However, in 1974, a Division Bench of the Calcutta High Court in CWT, West Bengal III v Smt. Sumitra Devi Jalan 96 ITR 35, held that Art.19 of the Table A, says that the transferor shall be deemed to remains a holder of the shares until the name of the transferee is entered in the register of members in respect thereof. So, a person to be a member has to hold shares and the name of such person has to be entered on the register of members, kept by the company pursuant to section 150 of the Companies Act, 1956 and such company obviously must be a company limited by shares, or by guarantee but having a share capital or an unlimited company where capital is held by indefinite shares.
Shareholder includes a person who has purchased the shares of a company and has lodged the transfer documents for registering as a shareholder. [Federal Bank Ltd. v Sarala Devi Rathi (1997) 88 Comp Cas 323, 325 (Raj)].

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