Who can become a member?

The general rule is that any person who is competent to contract may become a member of a company.
But this is subject to the provisions of the Memorandum and the Articles of the company. The articles
may provide that certain categories of persons cannot become members of the company. The general
law can be explained in the context of following categories of persons;

(a).Minors. A minor is not competent to contract and therefore a contract with a minor is absolutely
void. However it has been decided by courts that where an agreement in writing for a minor is signed by
his lawful guardian and the registration of a transfer of shares in the name of the minor, especially where
the shares are fully paid up cannot be refused on the ground of the transferee being a minor.

(b) Insolvent. An insolvent cannot become a member of a company, but if a member has become an
insolvent, he remains a member as long as his name appears in the register.

(c) Partnership firm. A partnership firm may hold shares in a Company in the individual names of
partners as joint shareholders. As an unincorporated association, a firm is not a person and as such it
cannot be entered as a member in the Register of members.

(d) Foreigners. Foreigners can become member of a company registered in India, but permission of the
Reserve Bank of India under the Foreign Exchange Management Act, 1999 has to be obtained. The right
of a foreigner as a member will be suspended if he becomes an alien enemy.

(e) Company. A company is a legal person and hence is competent to contract. Therefore, it can become
a member of another company. But it can invest money in another company only if it is so authorized by
its memorandum of association. But a company cannot be a member of itself.