A member may be distinguished from a shareholder in the foJIowillg manner

1. A person who subscribes to the Memorandum of Association inullediately becomes the member, even though no shares are allotted to hill. In case

shares are not allotted to the subscriber, he is a member but not the shareholder of tlle company.

2. A holder of a share warrant is a shareholder but not a member as his name is removed from the register of ill embers immediately after the

issue of such warrant. .

3. A legal representative of a deceased member becomes a shareholder immediately on the death of tlle member but he is not a member until he gets his

name entered in the register of members.

4, A person who acquires the shares in the open market may be shareholder but he does nor become the member automatically. .It is only when the

name of the transferee is recorded in the register of members that he becomes the member. Therefore, a person may be a shareholder but may not be a

member.

5. A person who has transferred his share to some. other person shall continue to be treated as the member of the company (even though he may not be

a shareholder) till the transfer is registered and the name of the transferee is recorded in the register of members.

6. When a person is declared insolvent, he is no longer the shareholder,

slough he continues to be the member of the company.

7. A company limited by guarantee or an unlimited company having

no share capital will have only members but no shareholders.

Certain prescribed particulars in regard to the company and other

listed companies under the same management which made any capital issue during the last 3 years. .

VII. Outstanding litigations relating to financial matters or criminal proceedings against the company or directors under Schedule XIII.

VIII. Management perception of risk factors (e.g., sensitivity to foreign exchange rate fluctuations, difficulty in availability of raw materials or in marketing of products, costume over-run etc.).

Part II of Schedule II requires the Sampan)’ to give detailed information. This part is further sub-divided into the parts, viz., General Information, Financial Information and Statutory and Other Information. General Information includes Information on matters like:

(i) Consent of directors, auditors, solicitors, managers to the issue, Registrars to the issue, Bankers of the company, Bankers to the issue and experts.

(ii) Experts’ opinion obtunded, if any.

(iii) Change, if any, in directors and auditors during the last 3 years and reason therefor.

(iv) Procedure and time schedule for allotment and issue of certificates.

(v) Names and addresses of Company Secretary, Legal advisory, Lead Managers, Co-managers, Auditors, Bankers to the issue and Brokers to the issue. Financial Information Includes:

(i) reports of the auditors of the company with respect to its profits and losses and assets and :inabilities and the rate of dividends paid during the 5 financial years immediately preceding the issue of prospectus;

(ii) reports by the accountants (who should be named) on the profits or losses for the preceding 5 financial years and on the assets and liabilities on date which shall not be more than 120 days before the date of the issue

of the prospectus. .

(iii) Reports of the profits and losses and assets and liabilities of subsidiaries, if any, .Separately for each subsidiary, Combined profits and losses and assets and liabilities of all subsidiaries with or without the assets and liabilities of the company. Statutory and other Information includes information about:

(i) Minimum subscription;

(ii) Expenses of the issue; giving separately fee payable to advisers, Registrars to the issue, Managers to the issue, and Trustees for the debenture holders.

(iii) Underwriting commission and brokerage;

(iv) Previous public or rights issue giving particulars about date of allotment, refunds, premium discount, etc. (during the last five years)

(v) Issue of shares otherwise than for cash;

(vi) Particulars about purchase of property, if any;

(vii) Revaluation of assets, if any, (during the last 5 years);

(viii) Material contracts and inspection of documents.

(ix) Debentures, redeemable preference shares and other instruments, outstanding on the date of issue of prospectus:

(x) Rights of members regarding voting, dividend, lien on shares and the process for the modification of such rights and forfeiture of shares; .

(xi) Restrictions, if any, on transfer and transmission of shares debentures and on their consolidation splitting:

(xii)Revaluation of assets, if any (during the last 5 years).Pali III Schedule II. It gives an explanation of certain terms and press ion used in Part I and Part II of the Schedule.

The articles of an unlimited company

(a) The articles of an unlimited company; should state the number of
members with which the company is to be registered, and if it has a share capital, the amount of share capital with which it is’ to be registered Sec. 27
(1)].
(b) The Articles of a company limited by guarantee must state the number of members with which the company is to be registered Sec. 27 (2)].
(c) The Articles of a private company having a share capital must contain the four restrictions as given in Sec. 3 (1) (iii) of the Companies Act namely
(i) restriction on the right of the members to transfer shares;
(ii) limitation of the number of its members to fifty. (For this purpose past and present employee of the company may be excluded; joint
lion dears of shares shall be treated as one member).
(i ii) prohibition of any invitation to the public to subscribe for any shares in or debentures of, the company; and
(iv) prohibition of invitation on acceptance of deposits from the public.
(d) In the case of a private company not having share capital, the Articles need not contain the sub-clause (i) above, but must contain the other three
sub-clauses i.e. sub-clauses (ii), (iii) and (i1') above. Indicate the relation between Memorandum of Association and Calicles of Association. .
Ans. The relationship between the Memorandum and articles of Association of a company is that the Articles of Association is subordinate to the
Memorandum of Association. Ties relation between these two documents is evident from the following points:
1. The Articles rank next after the Memorandum. The Memorandum of Association is the charter which defines tube institution of a company. It is the
dominant instrument which Jays down the conditions of incorporation and defines the scope and power of the company. On the other hand.

Duties which are ellforceable at law

Being a legal person, it has certain rights and duties which are unenforceable at law. It can act as a natural person like entering into contracts, owning property, etc., but it cannot marry, cannot be sent to jail, etc., like a natural person. Thus, a company is a creation of law and exists only in the eyes of law.
It has a name and can sue and be sued in that name. In this sense, it is an artificial person created by law. It has no physical shape, but it acts as a person in the eyes of law."A company is a person, artificial, invisible, intangible and existing only in the eyes oflaw. Being a mere creature oflaw, it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence" .-Chief Justice
Marshall.The views of Justic Marshall have been endorsed by Haney in the following words: "A company is an incorporated association, which is an artificial person created by law, having a separate entity, with a perpetual succession and a common seal." Thus, a company is a person though artificial, i.e., unlike human being; it exists only in the eyes oflaw and has no physical existence. It has an in&pendent legal entity, a common seal and perpetual succession no vision.The joint stock companies may be classified from different points of view, each one has a different explanation. Some companies are formed by the Government under Special Acts of Parliament while some others are registered under the Companies Act. Tose registered under the Companies Act are private or public companies limited by shares or guarantee or having unlimited liability. However, the most common form is the company limited by shares i.e. where the liability of its members is limited by the face value of shares held by them and not more than that. We are discussing, in this chapter various types of companies and their characteristics.
3. Pursuit of Specified Objects. A company is formed for specify,c objects and is granted incorporation to achieve these only. Such objects are stated in the constitution of the company called "Memorandum of Association". A company can act for the pursuit of these specified objects only.
4. Separate Legal Entity. It is an important characteristic of a company that it has a separate legal entity. bis means that the existence of a company is independent and separate from its members. In law, the company is regarded as an artificallegal person which deals in its. own name. Thus, a member of a company cannot be held liable for the acts of a company even if he holds the substantial part of share decision of the House of Lords in Salomon vs..
Salomon Co. Ltd. (1897) is a well-known authority for this principle.