[Opinion] Can a Society or a Cooperative Society be a Member of a Company?

1. Introduction

It has been an issue in the discussion of corporate professionals whether a Society registered under the Societies Registration Act 1860 or a Cooperative Society registered under the relevant law meant for Cooperative Societies can become a member of a company. Many companies have admitted the Societies as their members based on views provided by their advisors that a Society can become a member of the company. However, it is imperative to take an intense look into the issue without getting swayed by such recorded views.

2. What does the Law say about Membership?

2.1. Definition of a Member

Section (2)(55) of the Companies Act, 2013 has laid down the definition of the term member as follows:

“(55) “member”, in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become a member of the company, and on its registration, shall be entered as a member in its register of members;

(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.”

In each of the three categories, the pivotal term is ‘person’. As per the definition, the fundamental criterion for membership eligibility is that one must qualify as a ‘person’. Put differently, membership is restricted to individuals who are considered persons.

In the Companies Act 2013 no definition of the word ‘person’ is provided. However, in section 3(42) of the General Clauses Act, 1897, it is provided that expression ‘person’ includes ‘any company or association or body of individuals, whether incorporated or not.’

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