html5-img
1 / 15

Membership & Members’ Rights

Membership & Members’ Rights. MGM4321 Dr Zahira bt Mohd Ishan. Membership & Shareholding. Raja Khairulzaman Shah v Zaman Indah Sdn Bhd [1979] 2 MLJ 181 at 183 per Abdoolcader J.: “Mere allotment of shares does not create the status of membership”

kaden
Download Presentation

Membership & Members’ Rights

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Membership & Members’ Rights MGM4321 Dr ZahirabtMohdIshan

  2. Membership & Shareholding • Raja Khairulzaman Shah v Zaman Indah SdnBhd [1979] 2 MLJ 181 at 183 per Abdoolcader J.: “Mere allotment of shares does not create the status of membership” ~ Membership is not based on owning of shares. ~Co ltd by guarantee / unltd co: no share capital.

  3. Membership & Shareholding Distinction between a member and a mere shareholder: Ming Yueh Holdings SdnBhd v Kong Ming Bank Bhd & Anor [1990] 1 MLJ 374 at 378 per Haidar J.: the term ‘shareholder’ is often loosely used as a synonym for ‘member’. “However, a member need not be a shareholder, the obvious case being where the company does not have a share capital. Nor is a person who owns shares in a company necessarily a member, for instance, it is possible to purchase shares on the stock exchange without being registered as a holder of those shares in the company’s register of members. Thus a person may be a shareholder (in the sense of owning shares in the company) without being a member.”

  4. S.16(6): 2 ways to become member of co (1 of 2) 1. Subscribers to the MoA are automatically members of the co [members ipso facto on the incorp.] ~ Co ltd by shares (s.18(2) : subscriber must obtain shares directly from the co, not by share transfer from other member [Re Heyford Ironworks Co; Forbes & Judd’s Case (1870)] : Null & void resolution if co by board cancel allotment of shares to subscribers, unless shows that all co’s shares have been allotted to others (Ho Kim Hoi v The Anglo Ame. Corp Ltd [1938])

  5. Ho Kim Hoi v the Anglo Ame. Corp Ltd [1938] Fact: On 28 /6/1935, Appellant (A) subscribed his name to the MoA & AoA, and thereby agreed to take one share of $1,000.. The Company was incorporated on 1 /7/ 1935. A was appointed via an agreement (9/7) as sales director for 3 years at a salary of $440 pm. The Agreement was liable to be determined by 3 months' notice on either side. 19 /8: The Directors passed a resolution purporting to cancel the allotment of the appellant's Memorandum share. 30 /9: The Company gave the appellant three months notice terminating his agreement. 4/10: The parties entered into fresh agreement dispensing with the notice, and putting an end to the agreement as from 30 September 1935, and releasing each other from all claims. 24/10: The directors, having been advised that the cancellation of the allotment of the appellant's Memorandum share was illegal, treated such cancellation as a nullity, and resolved to demand payment of the $1,000 from the appellant. A refused to pay. Held: the Company had no power to cancel a share subscribed for in the Memorandum of Association. As A had not paid the $1000, he must pay it.

  6. Subscribers to the MoA: • Different position from other members: ~ becomes member upon incorp. [ipso facto] ~ name may not appear in the register of members. ~ shares deemed to have been issued at the date of incorp. ~ may not repudiate his membership even if been induced to join co by promoter’s misrepresentation [deemed to have agreed to become member: s.16(6)].

  7. Why can’t subscriber repudiate membership? :Re Metal Constituents Ltd ; Lord Lurgan’s Case [1902] provides 2 main reasons: 1-There is no agent prior to incorp; co is not liable for promoter’s act, & 2-Signing of MoA & incorp of co serve as a contract b’ween subscriber & co, and that contract is basis of the creation of the corp as one of the contracting parties, & every other person who becomes a member becomes such on the footing that that contract exists.

  8. S.16(6): 2 ways to become member of co (2 of 2) • Any person who agrees to become a member & whose name is on the register of members. ~ entries in the register of member is only prima facie evidence: s.158(4) & court can rectify the register to reflect true membership status:s.162 ~ that person must agree (s.16(6)) desirably in writing. Re Compania de Electricidad de la Provincia de Buenos Aires Ltd [1979]: must expressly / impliedly agreed to become a member. ~ if a person offer to take shares, the co must accept within specific term / reasonable time.

  9. ‘Joint holders of shares’: • 2/> members jointly hold the shares; has obligations of a member but with limited rights between themselves & qualified rights by the articles between each of them & the company. ~eg: Art 55 of Table A: at any GM, only the vote of first appeared name of the joint holder accepted. TH Saunders & Co Ltd [1908]: joint holders must decide the order of names in the register of members. ~ s. 15(1)(b): counted as one.

  10. Number of members: • S.14(1) : 2 / > • S.15(1)(b): 2>50 • S.36: veil of incorporation will be lifted if a co carries on its business > than 6 months with fewer than 2 members. After the 6th month + knew of that fact, he’ll be liable for payment of debt of co “contracted during the time that it so carries on business after those six months”. Both co & member shall be guilty .

  11. Shareholder But Not Member • Not entitled to exercise any of the rights of membership. SeowMui Kim v PerwiraHabib Bank [1987]: P was not entitled to vote / appoint nominees after shares had ceased to be registered in her name. • Not subject to member’s liabilities.

  12. Member’s Duty to Company • No fiduciary duty owed to co: Kuwait Asia Bank EC v Nat. Mutual Life Nominees

  13. Member’s Rights • Rights conferred by the Act, articles or general law. These personal rights are: 1- to have the MoA & AoA observed; 2- to restrain ultra vires acts; 3- to have access to company’s records & to have certain information provided to them; 4- where GMs are held, to attend & vote at GMs; 5- to be treated fairly. • Bound by certain policy of the majority which may not coincide with his own

  14. Shareholders’ Rights • Voting rights • Distribution rights • Receive information • Class rights where shares are divided into more than one class.

  15. Cessation of Membership : ~Transferring his shares to another person & the transferee is registered as the new shareholder ~ Transferring his shares back to the company under a “buy-back”: s.67A ~ Their shares are cancelled by the co under a reduction of capital: s. 64 ~ Their partly paid shares are forfeited when the person fails to pay a call; or ~ The co is deregistered, & ceases to exist.

More Related