Who can be Members of a Company?

The Companies Act, 2013 (the Act) does not specifically lay down any disqualifications for a person to become a member of a company. However, there are certain general principles that have been laid down by the courts. These principles are:

  • A person must be competent to enter into a contract. This means that the person must be of sound mind and not a minor.
  • A person must not be disqualified by law from being a member of a company. For example, a person who has been convicted of a serious crime may be disqualified from being a member of a company.
  • A person must not be disqualified by the company’s articles of association. The articles of association are the company’s constitution and they can set out any restrictions on who can be a member of the company.

Multiple choice questions (MCQs) on who can be members of a company

  1. Which of the following persons cannot be a member of a company?
    • A minor
    • A person of unsound mind
    • A foreign national
    • A convicted felon
    • A company
    • The answer is (c). A foreign national can be a member of a company.
  2. A company’s articles of association state that only natural persons can be members of the company. Can a Hindu Undivided Family (HUF) be a member of the company?
    • Yes
    • No
    • It depends on the interpretation of the articles of association
    • The answer is (c). It depends on the interpretation of the articles of association. The HUF is a legal entity but it is not a natural person. Therefore, whether the HUF can be a member of the company will depend on how the articles of association define the term “natural person”.
  3. A company is being wound up. One of the members of the company is insolvent. Can the insolvent member’s name be removed from the register of members?
    • Yes
    • No
    • It depends on the decision of the liquidator
    • The answer is (b). No, the insolvent member’s name cannot be removed from the register of members without the permission of the court. This is because the insolvent member still has certain rights as a member of the company, such as the right to vote at the company’s general meeting.

Answers

  1. (c)
  2. (c)
  3. (b)