Any person who owns the shares of the company is known as shareholder or stockholder of the company be it a public company or a private company registration. A shareholder can be any individual, partnership firm, corporation, or any other company. They are a vital part of the company, as they contribute to the company registrationby investing funds for its dealings. The company is bound to act what is in the best interest of the shareholder and always prioritize what is favorable for them. Shareholders also have voting rights that means that have the right to take part in all the major decisions of the company registration. They have the power to appoint directors, auditors, or any significant personnel. They do not directly manage the operations of the company but key important decision are taken post their approval. They are also not responsible for the company’s debts and obligations but has a share in profits of the company.

Who can become shareholders of the company registration

• Any person who is above 18 years of age.
• Since shareholding is a form of contract, so anyone who is eligible for entering into the contract according to Indian Contract Act, 1972, can become a shareholder of the company. There might be some provisions in MOA regarding debarring of certain persons from holding any shares in the company registration that can restrict someone from becoming a shareholder of the company, if there isn’t any provisions relating to this, then he/she can become the shareholder of the company.
• Any entity, corporate body, individual, etc.
• Any company can buy shares of the other company if its article allows.
• Two or more people can jointly hold shares.
• The state or central government can hold shares in any company.
• Any NRI or Foreign national can hold shares if the FDI permits.
• But a minor or a lunatic person cannot hold shares. The guardian of the minor person can hold shares in the company.

There are different classes of Shareholders which are listed below:

The Companies Act divides the members into three classes. According to Section 41 of the Companies Act the three class of members are:

• The persons who have subscribed to the MOA of the company.
• Every person who has agreed in writing and whose name has been registered in the Register.
• Every person holding an equity share of the company and is recorded as beneficial owner in the records of the depository.

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About Author

CA Nayani Agarwal is a Chartered Accountant who scored All India Rank-24 and have 6 years of experience in the field of Auditing, GST, Income tax and Accounting. She has given consultation to distinct industries over these years.

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