Members
Section 112 of CA2006 defines a member as being either a subscriber to the memorandum of association or some other person who has agreed to become a member of the company and has been registered as such in the register of members
With the exception of the members of a company limited by guarantee, the members of the company are its shareholders
The method of becoming a shareholder includes
Being a subscriber in the application to form a company
Purchasing shares
Having shares transferred into their name
Transmission by operation of the law such as the death or bankruptcy of a member
By order of the court
By the company
The method of ceasing to be a shareholder includes
Selling their shares
Transferring their shares
Order of the court
The winding up of a company
Dying or going insane
Not paying for their shares
Sale by the company under its lien
Transmission to personal representatives on death or bankruptcy
Redemption of redeemable preference shares
A consequence of the purchase by the company of its own shares
CA2006 provides that the company's constitution binds the company and its members as though they had individually covenanted to obey their provisions
The articles of association constitutes a contract between the company and its members and between the members themselves
The rights and obligations of the members depend upon the type of share that they hold in the company
The members do not owe a fiduciary duty to the company and they may therefore act in their own interests
The shareholders may or may not also be directors of the company and where they also act as a director, they will have all the usual rights and responsibilities that other directors have when acting in that capacity
The division of power
The role of the member was once more of a passive investor (the power to amend the constitution documents, the declaration of a dividend, the election or re-election of directors and the appointment of auditors). However this trend has in part been reversed by the growth of the institutional member
Institutional shareholders have a responsibility to make considered use of their votes and take steps to ensure that their voting intentions are being translated into practice
The division of power between the members in GMs and the board of directors as directors as determined by the company's articles has important and sometimes counter intuitive practical consequences for both types of parties
Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame (1906)
Imperial Hydropathic Hotel Co, Blackpool v Hampson (1882)
Duties and liabilities of members
Where a person or a group of people have rights by virtue of a public company it follows that the will also have duties and responsibilities and in most cases some liabilities
A member of a public company if so requested by the company must
Disclose their interest in the shares
Notify the company if they acquire 3% or more of the company's total voting rights and if their holding subsequently falls below 3%. Once a holding reaches 3% of more there is an obligation to advise of any changes which take the holding above or below the next percentage point (Disclosure and Transparency Rules)
Other duties and liabilities include contributing to the assets of the company in respect of any amounts outstanding on the shares which they hold on winding up