Explain the circumstances when Member is not a shareholder and vice-versa.

An organization is formed for purpose of education, sports, health, business with well defined objectives and relationships. The organization is by ‘members’ and ‘only for members.’

“Member means a person whose name is entered in the Register of Members of the company and are the holder of equity shares and are a beneficial owner in the records of Depository.

Buying shares is the most common and easy way where a person becomes a member of the company.

Following are different circumstances when Member is not a shareholder:

• Member without being a shareholder:
• Signatories to the Memorandum of Association: They are members of the company but not shareholders till the shares are not allotted to them.
• Company Limited by Guarantee Amount: This company does not have any share capital. Therefore, it has only members, not the shareholders.
• Transfer of shares: Transferor (seller) of shares continue to be a member of the company, till his name is removed from the Register of Members and is replaced by transferee’s (buyer) name.
• On the death of a member: On the death of a member, his legal heir becomes the holder of deceased member shares. But he is not a member of a company until the procedure of transmission of shares is completed.
• On insolvency of member: Shares of insolvent member are held by court-appointed Official Receiver. So the insolvent person continues to be a member but not the shareholder.
• Shareholder without being a member: The buyers of the shares, Official Receiver in case of insolvency; legal heir in case of death as explained above are shareholders but not the members of the company.