In case two or more persons jointly apply for and are allotted shares in a company, they are termed as joint shareholders. In the case of a public company, every joint holder of shares is considered as a member.
Moreover, joint shareholders do not constitute an entity, and, therefore, cannot be entered in the Register of Members as a single entity. But in the case of a private company, joint-shareholders are treated only as a single member and all of them are not counted as members for determining whether number of members exceeds 50.
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The provisions relating to joint shareholders can be summarised as follows:
(1) Joint shareholders are counted as one member for determining whether the number of members of a private company does not exceed 50 and also for determining the number of members required for making application under section 397 or 398 (regarding prevention of oppression and mismanagement).
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(2) Signature of any one of them is sufficient for signing a requisition or notice under section 169 (regarding extra-ordinary general meeting).
(3) The company is not bound to deliver more than one share certificate. The delivery of the certificate to one of the joint-holders will mean delivery to all. [Regulation 7(3) of Table A]
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(4) The company may serve the notices and other documents on the joint-holder named first in the register of members [Sec. 53 (4)].
(5) The company may pay dividend to the first named joint shareholders on the register of members unless they have all given in writing to pay dividend to any other person. [Sec. 205 (5)]
(6) As regards rights of the joint-shareholders to attend and vote at general meeting, a company may make its own provisions in its Articles provided that such provisions are not restrictive of any rights given to the shareholders under the Act. In the absence of any such provision in the articles, joint-holders may claim the following rights:
(a) To be individually present and take part in the debate at the meeting and vote on resolutions decided on a show of hands (Table A permits voting by the senior member-seniority to be decided according to the order in which the names appear in the register of members) but on a poll, the voting rights can be exercised only by all of them acting together;
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(b) To appoint proxy only by all of them jointly.
(7) joint-holders will be counted as only one member for purposes of quorum.
(8) Transfer of shares will be effective only if it is made by all the joint-holders. In the case of transmission of shares by operation of law, the right devolves on the representative of the deceased jointly with the survivor or survivors.
(9) Where the articles require any specified share qualification for appointment as director, shares held jointly with others will be sufficient qualification unless the Articles require that the shares should be held exclusively in the director’s own sole name.