minor as a shareholder reg.

[yoganand l]

can some one clarify on the position of the minor as a shareholder in an unlisted company :

 

- what should the register of members show - name of the minor alone / name of the minor alongwith guardian name, if so in what format / name of the guardian

- what should be shown in the 'list of shareholders' that is to be filed in sch.v

- if some shares are gifted by father to his minor son --> then should the gift deed be signed by the minor also as a donee

- in the case of aforesaid gift, who should sign the share transfer deed as transferee (minor / guardian i.e., father here)

 

 

regards,

yogan.

[CS A Rengarajan]

The following message already posted in csmysore and cschennai this is
for your information please

I am reproducing views of mr.N.P.shah. You cannot enter minor name in
the register and only guardian name to be entered. Kindly go through
the citation and it may be useful to you. The guardian is holding the
shares on behalf of minr.

Contrary views are solicited.

Best Regards

Minor as member
The Company Law Board held in Nandita Jain v. Bennett Coleman & Co.
Ltd., Appeal No. 27 of 1972, dated 17-2-1978, "Selected Decisions of
the Company Law Board", 3rd Edn. 37 (published by Government of India)
that a minor applying (through her natural guardian) for being
registered as a member of a company, was entitled to be so registered
if the shares were fully paid up. The Board relied upon observations
made in PENNNQT,ON'S COMPANY LAW, 2nd Edition, and in BUCKLEY ON THE
COMPANIES ACTS, 12th tion and observed that:

(1)the minor's ability- to exercise some of the rights of a member
under the Act and under the Memorandum and Articles is not material in
this context;

(2) the contractual obligation between a member and the company or
between members inier se under section 36 of the Act is also not
relevant in this context
;
(3)where the shares are fully paid up no personal covenant to pay for
the shares arose.
Under the Indian Law a minor's contract is void. Observations made by
authors in the context of the English Law of Contract, under which
such a contract is voidable are of little value. Under section
41(2) of the Companies Act, 1956, a member is defined as a person who
'agrees in writing' to become a member. The company, therefore, cannot
register a person unless the person desiring to be a member applies in
writing : a minor cannot agree to be a member of the company.
The CLB'S order relied upon two judgments of the Punjab High Court in
Diwan Singh v. Minerva Films Ltd., (1958) 28 Com Cases 191 (Punj) and
Dovan Singh v. Minerva Films Ltd., (1959) 29 Com Cases 263 (Punj) in
which there is no reference to section 30 of the Indian Companies Act,
1913, nor to section 41(2) of the Companies Act, 1956, as giving rise
to contractual obligations. The Board also relied upon its earlier
decision in, R. Balaraman v. Buckingham and Carnatic Co. Ltd., (1969)
1 Comp LJ 81 (CLB), where the Board directed the company to register a
transfer of fully paid-up shares in favour of the minor daughters of
the petitioner. The Board, in arriving at its decision held that the
provisions of S. 11 of the Indian Contract Act would not affect the
transfer since the shares were fully paid. The Board further held
that the transferee could sign as guardian of the minor daughters and
that the minors themselves would be the owners of the shares. The
guardian would not be the trustee and S. 153 would not apply. The
minor's names cannot be entered on the register of members. The
guardian's name may be entered on the register of members and he can
give notice of trust to the company under S. 187-C (which was enacted
in 1974) after these judgments were pronounced. But as far as the
company is concerned only the guardian will be the shareholder. The
CLB's view is also contrary to the decision in Dalmia Jain Airways
Ltd. v. Saroj Rani, ILR (1956) Punj 41. In Karnataka Theatres Ltd. Re
(2000) 100 Com Cases 124 : (2000) 2 Comp LJ 130(2000) 36 CLA 245
(CLB-SB), following the CLB decision in R Balaroman (supra) it has
been again held that there is nothing in the Companies Actprohibiting
a minor from becoming the member of a company. Section 41(2) read with
Regulation 19(1) of Table A indicates that the agreement in
writing can be made by the guardian on behalf of minor. It will not be
a case of trust because minor's name would be entered in the register.
He would incur no liability because the shares were fully paid. The
shares in question were obtained by transfer. Gautam R. Padival
(Minor) v. Karnataka Theatres Ltd., (2000) 37 CLA 244: (2000) CLC 1765
(CLB-SB).
When a guardian of a minor applies to be a member of a company, the
company cannot enter the name of a minor in the share register,
because a person's name may be registered as a shareholder only if he
agrees in

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csarengarajan
Company Secretary, Chennai
email csaren...@gmail.com
mobile 093810 11200
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