Capacity to be a member of a company / WHO MAY BECOME A MEMBER?

Capacity to be a member of a company / WHO MAY BECOME A MEMBER?

(kasneb cpa company law June2011 Q4 a – Describe the legal principles that govern the following classes of persons in relation to the membership of a company A minor, A bankrupt, a deceased member/personal representative–2 marks each)

Capacity to be a member of a company is governed by the rules of the common law relating to contracts and anyone who has the capacity to make a contract may become a member of a company. The following are some of the special cases, which require some explanation.

(a)        Infants

An infant is any person who has not attained the age of 18 years(age of majority) He has a common law right to enter into a contract to buy shares in a company, and thereby become a member of the company. The contract is however voidable at his option, and he may avoid it at any time during his infancy or within a reasonable time after attaining the age of 18 years A company's articles may however restrict membership of the company to adults only, in which case an infant would not become a member of the company.

(b)       Personal Representatives

On a shareholder's death, ownership of the shares previously held by him is transmitted to his personal representative, who may be an executor or administrator. The personal representative would be entitled to be registered as a member of the company unless the company's articles provide otherwise.

(c)        Corporations

A corporation, whether a registered company or not, may, if authorised by its memorandum (expressly or impliedly), take shares in a registered company and become a member of it. It would authorize "such person as it thinks fit to act as its representative at any meeting of the company.

(d) A person upon whom shares have devolved pursuant to the Provisions of Bankruptcy Act may become a member of the company.