Divya
in Corporate Law Contracts Law
Asked February 15, 2014

Eligibility of Minor be a member of a corporation

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Can a minor be a member of a corporation? Can he be made responsible for his acts under the Corporate Criminal Liability doctrine?

Answer 1

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Divya Maheshwari
The company law board held in Nandita Jain v. Bennett Coleman & Co. Ltd., that a minor applying (through her natural guardian) for bring registered as a member of a company, was entitled to be so registered if the shares were fully paid up. As regard the subject of minors being admitted as members being as members, the Department of Company Law Administration has expressed the following views: It relied on the case Mohori Bibi v. Dharmodas Ghosh,( 1903) 30 Cal 539, held that in India a contract by minor is void ab-intio. Apart from the subscribers to the memorandum of association of a company a person can become a member of a company only when he agrees in writing to be a member and when pursuant to such agreement the name of the person is entered in the register of members. Since a minor can’t enter into a contract except through the guardian, his name can’t be entered in the register of members and therefore, he can’t become a member of a company. Whereas due to the provision of section 10 of the Indian contract act,1872 a minor is not competent to enter into any contract for the purchase of shares, there is no bar to a minor purchasing fully paid up shares since in the event of such purchase there would be no covenant subsequent on the part of the minor. The guardian would be liable for the acts of minor.
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