A member of a company limited by shares is the natural person or entity that holds shares in the company and therefore as a result have whole or partial ownership (depending on the shareholding). One of the principal roles of a company member is to vote on resolutions (if that member has voting rights under the type of shareholding). Members also, as a matter of discretion of the board of directors, are entitled to receive a dividend from company profits.
The legal entities that are capable of being a member of a company include:
- A natural person;
- A company (body corporate); or
- A body politic (e.g. the State of NSW).
All companies must have at least one member and the limit of member numbers is dependent on the type of company. For example, a proprietary limited company is limited to having 50 members (that are not employees), however there is no limit regarding the membership of a public company.
As a member of a company, you are not liable for company debts. The only amount that you are liable for is the unpaid amount of shares that may be called upon.
Pursuant to section 231 of the Corporations Act 2001 (Cth), a person will be a member of a company if they:
- Are a member of the company on its registration; or
- Agree to become a member of the company after its registration and their name is entered on the registered of members; or
- Become a member of the company under section 167 (membership arising from conversion of a company from one limited by guarantee to one limited by share).
A member must provide written consent to become a shareholder.