Rights and Cessation of Company Membership

Rights of a Member in a Company

• Members of a company possess specific legal entitlements including the right to dividends, which are considered debts due and recoverable by the member.
• Members have the right to bonus shares, provided they have been declared; these are characterized as shares at a premium.
• Every member has the fundamental right to attend meetings and vote at such meetings. This is codified under Section $107$ of KAMA.
• Members are entitled to receive notice of meetings. This principle is reinforced by the legal precedent established in the case of Longue vs. FBN (alternatively spelled FBM or FBN in the transcript).
• Members have the right to be voted for during meetings, not just the right to vote.
• In a company limited by shares, members have the right to demand voting by poll rather than just by a show of hands.
• The right to appoint a proxy is guaranteed to members who cannot attend meetings in person.
• Shareholders/members have proprietary rights, including the right to own shares, transfer shares, and sell, mortgage, or otherwise dispose of their shares.
• Members have the legal standing to take up minority action to protect their interests within the corporate structure.
• Access to information is a key right, including the right to receive financial reports and copies of the company's Memorandum and Articles of Association.

Invalidation of Resolutions due to Lack of Notice

• If a member is entitled to receive a notice of a meeting and none was provided, and no explanation was given for this failure (ensuring it was not a result of mere inadvertence), the member has the right to invalidate any resolution taken during that meeting.
• The member has the legal standing to declare that whatever occurred at the meeting cannot stand because they were not notified and could not participate in the proceedings.

Financial Rights and Dividend Recovery

• A member has the right to receive a dividend once it is officially declared by the general meeting.
• Once a dividend is declared by the general meeting, it transforms into a "special debt" owed by the company to its shareholders.
• As a special debt, the dividend becomes actionable immediately upon declaration.
• Shareholders or members have a legal window of $12$ years to recover this debt by taking action in court.

Cessation of Membership

• Membership in a company is not permanent and can be terminated under various circumstances. A person ceases to be a member in the following instances:
  • By Transfer: This occurs when a member transfers all of their shares to another person. For example, if a father who is a member of UBA transfers all his shares to his child, the father ceases to be a member, and the child becomes the new member.
  • By Forfeiture of Shares: This process is governed by Section $165$ of KAMA.
  • By Exercise of Lien: The company may exercise its right of lien over a member's shares.
  • By Valid Surrender: A member may hand their shares back to the company. This is illustrated in the case of Trevor vs. Whitworth (spelled w h i t w o r t h).
  • By Death: Under Section $179$ of KAMA, membership ceases upon the death of the individual.

Mechanisms of Forfeiture and Lien

• Forfeiture of shares can occur under specific conditions defined by KAMA:
  • Failure to Pay: If a member fails to pay for their shares when a "call" is made by the company (requesting payment on the unpaid amount of the shares).
  • Illegal Funding: Shares purchased with stolen funds can be forfeited to the Federal Government following a conviction.
• When shares are not fully paid up, the company maintains a lien over those shares. This gives the company the power to seize those shares.
• If a member is unable or fails to pay the remaining balance after the company makes a call for payment, the person forfeits the shares back to the company.
• Membership also ceases if the company sells the shares specifically to enforce its lien.