By Simon O’ Connor, 12th January 2016
The Companies Act 2014 has introduced some significant changes in company law. This includes the introduction of new company types and also changes to the roles of various parties in company law such as the members and shareholders of a company.
What is a member?
A member of a company is a person who contributes to the investment of a company. This person is registered as such and has certain rights. The original subscribers to a company’s constitution are considered to have agreed to become a member of that company. Their names must also be entered into its register of members upon registration. Anyone else, who agrees to become a member of a company, must enter their name into the company’s register of members.
Register of Members
Every company must keep a register of their members within the country at either their registered office or their main place of business. This register is open to inspection to every member of the company free of charge and the any member of the public on payment of the relevant fee. The register of members must contain the following particulars:
- Name & Address
- Amount of Shares held by each member
- Date on which each person was entered in the register as a member
- The date on which each person ceased to be a member of the company
What is a Shareholder?
A shareholder is an individual who holds at least one share in a company. When their name has been input into the register of members they then become a member of the company. It is important to understand that a shareholder will not become a member of a company until their name has been input into the register. Depending on the nature of the company, a member’s rights and responsibilities will vary.
Duties of Members and Shareholders
The main duty of a member who is a shareholder is to pay the company the sum which remains outstanding for the agreed amount of the share(s) that have been issued. This sum becomes payable by the shareholder when requested by the company or on payment date(s) that have been prearranged.
Rights and Powers of Members and Shareholders
The Companies Act and the constitution of a company normally set out the powers of members and those powers which are delegated by the members to the directors of the company. The Companies Act provides that the business of the company is managed by its directors, who may exercise all such powers of the company that are not required by the Companies Act or by the constitution to be exercised by the company members in a general meeting. Below is a list of the Rights/Powers of a Member and Shareholder:
- Transfer of Shares
- Dividend and Distribution
- Shareholders Pre-emption Rights
- Right to Participate in a Winding-Up
- Rights Regarding Members’ Meetings
- Members’ Right to Information
- Members’ Powers where the Company is in Default
- Right of Members to Apply for the Restoration of a Company
- Members’ Right to Seek an Investigation of a Company
- Right to Petition for the Winding-up of a Company
- Right to Petition for Relief in Cases of Oppression
A Shareholder/ Member found to be abusing their powers or not fulfilling their duties are liable to penalties under the Companies Act. There are two types of criminal offences, summary and indictable offences. A summary offence is usually a less serious offence and is tried before a judge only in the District Court. Indictable offences are generally a more serious offence and can only be tried in the District Court before a judge. The main difference between the two types of offences is that an indictable offence can also be tried in the Circuit Court in front of a judge and a jury.
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