Joint Shareholding in a Company

Joint Shareholding is when a person holds share(s) jointly with more than one person in a company or different companies. Joint Shareholders are considered as distinct members of the company with all their rights stated in the Articles of Association.

In a Private Limited Company, joint shareholders are considered as one/single member since the maximum number of members can not extend 200 in number.  They are not considered as a legal entity and do not acquire a legal status even after incorporation of a Company.

It can also be so that legal entities hold shares of a company. In such a case, the shares can be associated only with the entity and not any members under it.  The governing provisions of joint shareholders must be clearly mentioned in the Articles of Association.

You will be considered as a member of the Company as long as your name appears in the Register of Members of the Company.  

Rights of a Joint Shareholder

• In case the company issues any document or notice it is issued to the joint holders named first in the Register of Members.
• The joint shareholders can ask for the payment of dividend through a cheque or warrant to be sent through a post on the registered address of the shareholder named first in the Register.
• They can appoint a nominee together to transfer their securities in the event of death according to the provisions laid in Section 72 of The Companies Act, 2013.
• In a general meeting of a company, the vote of the senior member either in person or appointing a proxy can be accepted to the exclusion of votes of other joint holders.
• For the shares held jointly, the shareholders shall be jointly and severally liable to pay all the calls.
• More than one joint shareholders can call for a general meeting by signing an application.
• It is not mandatory for the company to issue separate share certificates to each joint shareholder and rather delivery to one of the joint-holders mean intimidating all.
• Anyone of the joint shareholder or even more than one may give receipts for dividends, bonus or any other money payable in the context of the share.

Death of a Joint Shareholder

In case any of the joint shareholders die then the other people holding the share will be entitled to its share and not any legal representatives of the shareholder.

As per The Companies Act, 2013, in the event of death, only the survivor(s) in case of a joint/individual shareholding will be recognised by the concerned company for any title or interest in its shares.  

Also, for a company to register a legal entity/heir of the deceased member a transfer instrument needs to be submitted where the transferor will be the existing partner and the legal heir will be transferee.  

You can also split the joint shareholding in the name of individual shareholders through the transfer instrument in the name of all the people in whose name it is to be transferred. The same document needs to be submitted to the respective company.  

Frequently Asked Questions

Is there any maximum limit for Joint Shareholders in a Company?

No, there is no such limit on the number of joint shareholders as this is decided by the company and clearly mentioned in the Articles of Association.  

Do all shareholders have equal rights?

Usually, all the shareholders have similar rights; however; in some cases, special preference is given the ones named first in the Company’s Register or senior shareholder.

Can you transfer a Joint Shareholding to an Individual Shareholding?

Yes, joint shareholding can be converted into individual shareholding through a stock transfer form which is no other than a Share Transfer procedure. All the shareholders must be agreed upon the decision. You can also apply for the process of share transfer online.

Can you manage the shares electronically?

Yes, you can open a DEMAT account which will help you to hold shares in an electronic form without the need of exchanging shares through certificates.

For this, you would also need to submit the required documents in the bank and with the broker (acting as a manager between you and the bank) after which you can use the account for share purposes.