shareholder
This query is : Resolved
23 February 2017
Under which section AOP can become member, it does not have separate legal entity
Message likes :
1 times
24 February 2017
Section 581 A (d) of the Companies Act, 1956 and can be enforced through 1st proviso to section 465 (1) of the Companies Act,2013.
24 February 2017
Thanks a lot sir
Since it's disputed matter, I suggested the client not to buy shares because he wanted to buy below FMV
25 July 2025
Great question about AOP (Association of Persons) becoming a member of a company despite not having a separate legal entity!
Can an AOP become a member of a company?
Although an AOP does not have a separate legal entity, it can become a member of a company.
This is allowed under:
Section 581A(d) of the Companies Act, 1956 (now repealed but still referred in some contexts)
First proviso to Section 465(1) of the Companies Act, 2013, which allows AOPs and firms to hold shares in a company and exercise rights as members.
Key Points:
The AOP, as a group of individuals or entities, can hold shares in its collective capacity.
The company will recognize the AOP as a member for exercising rights like voting, dividends, etc.
However, since the AOP is not a legal person, disputes may arise, which is why caution is advised, especially if shares are being bought below Fair Market Value (FMV).
Why avoid buying shares through an AOP?
The status of AOP as shareholder can lead to complications in legal standing.
Issues may arise regarding transfer, voting rights, and legal disputes.
Hence, your suggestion to the client not to buy shares below FMV via AOP is prudent in a disputed matter.
Can an AOP become a member of a company?
Although an AOP does not have a separate legal entity, it can become a member of a company.
This is allowed under:
Section 581A(d) of the Companies Act, 1956 (now repealed but still referred in some contexts)
First proviso to Section 465(1) of the Companies Act, 2013, which allows AOPs and firms to hold shares in a company and exercise rights as members.
Key Points:
The AOP, as a group of individuals or entities, can hold shares in its collective capacity.
The company will recognize the AOP as a member for exercising rights like voting, dividends, etc.
However, since the AOP is not a legal person, disputes may arise, which is why caution is advised, especially if shares are being bought below Fair Market Value (FMV).
Why avoid buying shares through an AOP?
The status of AOP as shareholder can lead to complications in legal standing.
Issues may arise regarding transfer, voting rights, and legal disputes.
Hence, your suggestion to the client not to buy shares below FMV via AOP is prudent in a disputed matter.
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