Special Festive Offer: 10% OFF Across All Membership Plans. Subscribe Now!

How would you define member of Section 8 company and their purpose?

654 views

Save Share

:) Nitin

Beginner Consultant

27 Points Posted on 22 July 2021

Most of the associations and chambers registered under section 8 invite professional or general public to become members by charging a fixed fees in such case my questions are -

Do such members act as shareholders of the company?
Do such members have legal obligations with MCA in future?
Do such members can vote for directors elections?
Can such members choose or vote for a leader (to act as catalyst or to be included in committee of association) from themselves?
Do such members can be obstacle while amalgamation with another section 8 or merging into another entity?
Can company directly cancel membership of such members in case of dispute or breach of regulations?

Please enlighten.

Warm Regards,

Nitin

Replies (2)

Quick Summary

This discussion clarifies the status of members in Section 8 companies, distinguishing them from shareholders. It explores whether these members have voting rights, legal obligations to the MCA, and can influence director elections or leadership selections. The conversation also touches upon their potential role in company amalgamation or mergers and the company's ability to cancel membership.

CS Divesh Goyal

Practicing Compnay Secretary

47136 Points Posted on 23 July 2021

First, we have to check they are distributing membership or they are making them shareholder.

:) Nitin

Beginner Consultant

27 Points Posted on 23 July 2021

They are distributing membership but not making them shareholder, I think that those fees might be entry fees not the sum of shares to purchase, because generally these associations exceeds 200 members and there are no provisions of returns. See for example a XYZ Chamber of Commerce have Entrepreneurs Wing in which they invite entrepreneurs to become their member with options of Elite, Premium and Patron. I want to know if these members are authorized members of company?

In such case, can member participate in voting? If Yes, then under which section you define such members?