[Member] Company Membership

According to s2(1) of the Companies Act 2016 (“CA”), a member is a person whose name is entered in the register of members as the holder for the time being of one or more shares in the company in the case of a
company limited by shares. On the other hand, in the case of a company limited by guarantee, member refers to a person whose name is entered in the register of members.

S14(3)(e) CA requires the name, identification, nationality and the ordinary place of residence of every person who is to be a member of the company and, where any of these persons is a body corporate, the corporate name, place of incorporation, registration number and the registered office of the body corporate.

For context, the members of a company may be natural persons or body corporates. S.3 of CA 2016 defines body corporate to include companies and limited liability partnerships incorporated in Malaysia or outside Malaysia,
associations, societies and statutory bodies. In the case of Re Barned’s Banking, ex p Contract Corp, members of company refer to those person including corporations who collectively constitute the company.

There are a few important things to note when becoming a member:

1) Must be registered

S50(1) CA provides that every company shall keep a register of members and record in the register. Among the information required in the register are the particulars of its members.

Besides, S50(3) CA states that the register of members shall be prima facie evidence of any matters inserted in the register as required or authorized by this Act. Moreover, s101(1) CA mentioned that the name of person in the register is prima facie evidence of legal title to shares because the share certificate is not issued unless requested.

In the case of Ayer Molek Rubber Co Bhd v Insas Bhd, it was held that the process of becoming a member is incomplete until entry on the register.

Lastly, S50(4) CA provides the person who contravenes this section shall be liable to a fine not exceeding RM10,000 and in the case of a continuing offence, to further fine not exceeding RM500 for each day during which the offence continues after conviction.

2) A shareholder is not a member unless registered

In the case of Ming Yueh Holdings Sdn Bhd v Kong Ming Bank Bhd & Anor, has been established that a member need not be a shareholder. Besides, a person who owns shares in a company is not necessarily a member. 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 member may be a shareholder without being a member.

Similarly, in the case of Raja Kamarulzaman Shah v Zaman Indah Sdn Bhd, the court held that mere allotment of shares does not create the status of membership. Therefore, even if a person is allotted with shares, he is not considered a member until his name is in the company’s register of members.

3) Ways to become a member of a company

S18(2) CA the provides that a person shall become a member of a company upon its incorporation if he is named as a member in the application for incorporation of the company. The common elements are that the person must agree to become a member and to his name being entered in the company’s register of members.

Besides, as per s77 CA, a person may become a member of a company when he is allotted shares in the company.

Lastly, the purchaser of the company’s shares becomes a member of the company when his name is entered in the register as proven in s105 and 106(1) CA.