Company Law: Member vs Shareholder Explained

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In company law, a 'member' is typically someone who has subscribed to the company's memorandum or whose name is entered in the register of members. A 'shareholder', on the other hand, is simply someone who owns shares. While all shareholders are usually members, not all members are necessarily shareholders, especially if their name isn't formally registered. The Companies Act 2013 defines these terms, clarifying their distinct roles and requirements.

RAKESH

RAKESH (Querist)
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29 September 2021 Dear Sir ,

I want to ask member and shareholder are the same term . we can use this words interchangeably . Secondly- COmapany can take loan or give loan to outsider .

REgards

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 September 2021 Member:

A member is a person who subscribed the memorandum of the company[at the time of incorporation and thereafter by subscribing equity shares].

The term member is defined under section 2 (55) of the Companies Act, 2013.

The bearer of a share warrant is not a member.

All shareholders whose name are entered in the register of members are the members.

In the case of a public company, there must be a minimum of 7 members. There is no such cap on the maximum number of members. Similarly, a private company can have a minimum of 2 and maximum of 200 members.

Shareholder:

A shareholder is a person who owns the shares of the company.

The bearer of a share warrant is can be a shareholder.

all members may not be the shareholders.

RAKESH

RAKESH (Querist)
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29 September 2021 Sir, Share holder cannot become a member unless their name is entered in the register of member . but one can become member without acquiring the shares of pvt ltd co.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 September 2021 Agreed ... I didn't say any thing contrary to that..

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