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Prov Compan Act Regard Holding

Joint shareholding refers to a situation where shares in a company are held by more than two shareholders. For public companies, each joint shareholder is considered a distinct member, while for private companies all joint shareholders together are considered a single member. When shares are jointly held, all joint holders must sign instruments for transferring or splitting shares, except for just changing the order of names. Upon the death of a joint shareholder, the surviving holder(s) become the only recognized member(s) by the company. A deceased shareholder's legal heir is not automatically added to the register of members and must have the shares transferred through surviving shareholders. The document outlines various rights and duties that apply to joint shareholders under the Companies Act, such

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23 views1 page

Prov Compan Act Regard Holding

Joint shareholding refers to a situation where shares in a company are held by more than two shareholders. For public companies, each joint shareholder is considered a distinct member, while for private companies all joint shareholders together are considered a single member. When shares are jointly held, all joint holders must sign instruments for transferring or splitting shares, except for just changing the order of names. Upon the death of a joint shareholder, the surviving holder(s) become the only recognized member(s) by the company. A deceased shareholder's legal heir is not automatically added to the register of members and must have the shares transferred through surviving shareholders. The document outlines various rights and duties that apply to joint shareholders under the Companies Act, such

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Sa-Dhan Legal Resource Note # 11

Provisions Of The Companies Act Regarding Holding Of Shares Jointly By More Than Two Shareholders
Act: The Companies Act, 1956
Relevant Section
1. Preliminary
I) The concept of Joint Shareholding is only a legal
fiction which refers to a situation when the shares in
a company are held jointly by more than one person.
II) In the case of Public Limited Company every joint
shareholder is considered as a distinct member of the
company, while in case of Private Limited
Companies every such joint shareholder is
considered as single member.
III) In the case of joint shareholding all the joint holders
should sign the instrument to transfer the shares or to
split the shares into individual holding. However, no
instrument of transfer is necessary where there is
only transposition of names of the joint holders.
IV) When one of the joint shareholders dies, the
surviving holder (or holders) shall be the only person
(s) which the company would recognize as a member
(or members) of the company, and name of the
deceased joint holder shall be deleted from the
records of the company. A legal heir of the deceased
joint shareholder is not entitled to get his
automatically entered in the register of members on
the death of the deceased shareholder.
V) Although if the legal heir of the deceased shareholder
wants himself to be registered as a member, the
surviving joint shareholders must submit a share
transfer instrument with the company, wherein the
surviving shareholder will be the transferor(s) and
the legal heir will be the transferee.

Provision of the Rights/Duties of Joint Shareholders


Companies Act
directed to the registered address of one
of the joint shareholders who is first
named on the register of members.
Section
At a general meeting of a company, the
vote of the senior (i.e., first-named)
joint holder who tenders a vote, whether
in person or by proxy, shall be accepted
to the exclusion of the votes of the other
joint holders.
Section
In respect of any share (s) held jointly,
the company shall not be bound to issue
more than one certificate and delivery
of the certificate to one of several joint
holders shall be sufficient delivery to all
such holders.
Section 91

The joint holders of a share shall be


jointly and severally liable to pay all
calls in respect thereof.

Section

Any one of two or more joint holders of


a share may give effectual receipts for
any dividends, bonuses or other moneys
payable in respect of such share.
A requisition for convening a extraordinary general meeting or notice
calling a meeting by the requisitionists
themselves may be signed by one or
some only of the joint holders and such
requisition or notice shall have the same
force and effect as if it had been signed
by all of them.
Where any share(s) are held by two or
more persons jointly, they shall be
counted only as one member for the
purposes of eligibility to make an
application under Section 397 or 398 in
case filing an application with the
Company Law Board for relief against
oppression and/or mismanagement.

Section 169

Section 399(2)

VI) In the case of splitting of the shares, all the joint


shareholders must sign the transfer deed as
transferors and the respective individual holders, in
whose name(s) the splitting is to be made, shall sign
it as transferee (s).
2. Application
Provision of the Rights/Duties of Joint Shareholders
Companies Act
Section 53 (4)
A document to be served by a company
on its members may be served on the
joint holder named first in the register of
members and not separately to all the
joint shareholders.
Section 205 (5) Any dividend payable may be paid by
cheque or warrant sent through the post

3. Filing And Fees


4. Follow Up
5. Miscellaneous

This legal resource note has been compiled specially for Sa-Dhan by Ramesh S. Arunachalam, using available legal resources in India.
First published in August 2006. Sa-Dhan. Website: www.sa-dhan.org

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