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Shareholders
1. Membership, Register & Index of members
2. Division of Shares & Class rights
3. Declaration and Payment of dividends
4. Variation of Class Rights
5. Liability of Shareholders
6. Forfeiture of Shares
MEMBERSHIP, REGISTER AND INDEX OF MEMBERS
No definition of members in the CA but the Act provides ways and how one
can become a member
1) Section 92(1) subscribers to MOA become members on registration of
the company where the rights and liabilities attach.
2) Through;
a)Allotment this is through a beneficiary who holds in trust and a mortgagee
but a holding vis-à-vis a subsidiary co be hold on behalf thus the allotment
and transfer is void.
b)Operation of law; personal representative of deceased or trustee in the
bankruptcy of an insolvent shareholder.
c)Directors undertaking to take or pay for qualifying shares
d)Estoppel
REGISTER AND INDEX OF MEMBERS
• Section 93(1) Every registered co must keep a register
a) Names b) personal address c)date on which they became a member
d) Date one ceased to become a member.
GENERAL RULE; The shareholders rank equally and have equal rights
However the CA does not provide for the classes of shares but the members
can do so in the MOA
Ordinary shares have no special rights attached to it. Ie Equity share
1) Income rights who? They are the real owner of the co. when? They get
income after all the classes of shares have obtained dividends
2) Voting rights
3) Capital rights –during winding up return of capital and company debts
have been paid off.
Preference shares
4) Participation preference
5) Redeemable Preference
6) Deferred shares
7) Unclassified shares
8) Non voting ordinary shares
9) Equity shares and debenture shares
Continuation…
case; Bushell v Faith
The plaintiff, the defendant and the sister divided the shares equally. The
defendant and the plaintiff were the directors of the company. The plaintiff
and the sister removed the plaintiff from his office. This was upheld since the
weight of the votes by the defendant was 200 and together with the sisters
100.The weight attached to the voting rights was 1:3:1: The shares are
ordinary
Ordinary shares may attach an non voting right to it.
• Articles operate as a contract thus bind new members
In practice the right of shareholders are specified in the contract between
the members allotted the share.
• Dividends are not deemed to have been paid, unless and until the
respective shareholders receive payment of money or unless the
distribution is unreservedly put at their disposal.
• The recovery of such capital is a contractual debt the only way one may
avoid this statutory liability is by fully paying the share. (nominal capital)
• In practice part payment due on definite dates or on allotment are subject
to express provision in the articles deemed to calls with the usual
remedies of lien and forfeiture in favor of the company against defaulting
holders
• The liability is not only limited on the on original subscribers but also the
subsequent holder of share.
• Directors may make calls upon the members in respect of any moneys
unpaid on their shares
• The company upon forfeiture has the right to sell to new holders who
become liable for the previous holders dues
• The directors exercise their power to forfeit and dispose of shares subject
to their duty to act bona fides and for a proper purpose in the interest of
the company.
• The sale or disposal of shares is decided by the directors and the forfeiture
itself may be cancelled on their terms.
• Liability shall be as a debtor and not a member which will cease upon
completion of the payments