An individual whose name is in the register of members of a firm becomes a member of that corporation. The register contains every single aspect about the member like name, address, occupation, date of becoming a member, etc. It also contains every person who holds company’s shares and who is the supportive owner of the company.

The liabilities that include all the short term debts as well as long term debts of members are limited to the face value of shares kept by the members in the case of a company having share capital while in the case of a company limited by guarantee the liability of members is restricted to the amount of assurance given by them. But, in the case of an unlimited company the members have to pay from his personal assets to pay the debts.

The members cannot take part in the management of the company, i.e. the management of the company is looked after by the Board of Directors and along with that the decision making process. Although members have the right to appoint the directors and their vote means a lot in the selection process of the director.


An individual who owns the share of a public or a private firm is known as a ‘Shareholder.’ A subscriber of shares is not regarded as the shareholder until the shares are actually allotted to him.

The shareholders are the landlords of the company, i.e. to the extent of the share capital held by them. The legal representative of the dead member is a shareholder, not the member, until and unless his name is recorded in the register of members of the enterprise. Every shareholder is a member but every member, is not a shareholder.

Shareholders have right to transfer or sell their share, to get the dividend, to attend the general meeting and vote, to take copies of Memorandum and Articles of Association and to receive the copy of the statutory report.

Differences between Members and Shareholders

The following are the differences between members and shareholders:

  • A member is a person who subscribed the memorandum of the company. A shareholder is a person who owns the shares of the company.
  • The bearer of a share warrant is not a member, but the bearer of a share warrant can be a shareholder.
  • All shareholders whose name is entered in the register of members are the members. On the other hand, all members may not be the shareholders.
  • In the case of a public company, there must be a minimum of 7 members. A private company can have a minimum of 2 and maximum of 50 members. As opposed to shareholders, there is no minimum or maximum limit, in the case of a public company.

Members and Shareholders both are important persons of any company, whether it is public or a private limited company.

financial management

November 18, 2018