Partial Allotment. When the shares issued by a company are j oversubscribed, the directors Item to aUot less number of shares to all or some of the applicants than what they applied for. This is known as partial allotment. Such a partial allotment is not binding on the applicant and be may refuse or repudiate the shares allotted to him
It must be remembered that allotment is a form of contractgoverned by the general principles of the law of contract. An application for shares is the offer made by the applicant to take the specified rmmber of shares in the company Allotment has the effect of acceptance ofthe offer and tbos ma it a valid contract. But in order to be bin tine on the apphcamt it must be unconditional. If the directors decide to allot lesser or greater nutnbff of shares than applied for, the acceptanceteGomes conditionalamdmayberffused by the applicant. It is in fact a connter 7hich may or may notbe accepted
: by the applicant in order to guard against such eventuality, the application forms usually contain a clause: "I agree to accept such shares or any smatter number that may be allotted to me " This signifies the consent of the applicant to accept a partial allotment of shares
Adjnstmettt of Excess Application Money. When am apphcant for shares is allotted lesser number of shares than applied for, the application money paid by him on the uriatlotted shares is not refunded to him. The excess application money to his credit is transferred to his aUotnrit account and adjusted against the allotment money due from him. That is, w hen he pays the allotment money he has to pay that much less. An entry is :made in the Application anct Allotment List to that effect and the apphc;mt is informed of this fact in the allotment letter
of another company-. in payn ent of a debt by a compromise or an arrangement also a company can become a member of another company, if of course, the Articles omNfemorandum is notspeciallyprohibihng the company to become a member in payment of a debt
However. a company- can not purchase its own shares. Hence it cannot becomes its own member Similarly under the provisions of Section 42, a subsidiary companv also canmot purchase shares of It$ holding company and thus cammot become the member of the holding company unless specified under certain circumstances.
3. Partnership Firm. A firm also camlot become the member of the company However, its garblers in their individual capacity can become.
In both the above (2&3) cases it must be noted that neither the H.U.F nor the firm enjoy separate entity The Karta in H I U.F and the partners in the FiMI are very much the part of the organization. Thee- do not enjoy the rights of a legal or artificial persons. Hence, catunotbeco0e the member of a compamy
5. Minor. A minor earshot become a member But on his behalf shares can be purchased by his guardian witlioutl indicating the fact and then the company shall have no option but enter his (Guardi Al) name as member Of course, there shall be no indicatmn in the register to the fact that the guardian is acti ng on behalf of the nunDr Hou at or, the guardian shall for all practical be the member of the company Shares shall be issued in his-name and every transaction will take place in his name. The company is within its rights to refuse the registration of a transfer in the name of a minor :
6. Insolvent. An insolvent can become and shall remain the member of the company provided its Articles have not provided coniraryto this provision. Of course, his beneficial interests hi the shareshallcertainlyvest in the official Assignee or the Receiver as soon as he is declared as insolvent. :
7. Married Women. A married woman, irrespective of her religion, can become a member of a company as she IS Competent to enter into a contract under the law
A trustee cannot becomes inember of a company Section 153 of the Indian Companies Act spectallyprovides titat "no notice of any tnust express or implied, or constructive can be entered on the Register of Member of a CompanY
9. Registered Society A registered society, registered under the Registration of :Societies Act, 1960, can purchase and thus hold shares in a company. Ir. its ov-n name, therefore, the society IS authorised to become a member of a comp u y
10. Individual. If connpet-nt to enter into contract under law an individual can purchase and hold the shares of a company, and then if consents to, becomes a member of the company.
HOW IS THE MEMBERSHIP: OF A COMPANY ACQUIRED?