12.
Explanation
ecoming and ceasing to be a member of a company typically involves certain processes and actions. Here are some common ways:
Becoming a Member:
1. Subscription: An individual can become a member by subscribing to the company’s shares or membership interests and fulfilling any required payment or conditions.
2. Purchase of Shares: In the case of a corporation, a person can become a member by purchasing shares in the company.
3. Transfer of Membership: Memberships can be transferred from one person to another through a process defined in the company’s articles of association or operating agreement.
4. Initial Incorporation: In the case of a corporation, individuals can become members at the time of the company’s incorporation.
Ceasing to be a Member:
1. Resignation: A member can typically resign by notifying the company according to the company’s rules or legal requirements.
2. Death or Incapacity: In the case of an individual member, death or legal incapacity can lead to the cessation of membership.
3. Transfer of Membership: A member’s membership can cease if they transfer or sell their membership interest to another person.
4. Expulsion: In certain circumstances, a member may be expelled from the company as defined in the company’s governing documents.
5. Liquidation or Dissolution: When a company undergoes liquidation or dissolution, it can lead to the cessation of memberships.
Certainly, here are some additional details on becoming and ceasing to be a member of a company:
Becoming a Member:
1.Subscription Agreement: Companies may require individuals to enter into a subscription agreement, which outlines the terms and conditions of their membership, including the number of shares or membership interests to be acquired.
2.Initial Capital Contribution: In some cases, members are required to make an initial capital contribution to the company as part of becoming a member.
Ceasing to be a Member:
1.Buy-Sell Agreements: Many companies, especially closely held ones, have buy-sell agreements in place. These agreements specify conditions under which a member can sell their interest or other members can buy it when a member wishes to exit.
2.Bankruptcy: If a member files for bankruptcy, it can lead to the cessation of their membership, depending on the company’s operating agreement or the laws in place.
3.Voting Rights: Some companies may have provisions that allow for the removal of a member through a vote by other members or the board of directors.
4.Legal Actions: In cases of misconduct or breach of the company’s governing documents, legal actions or court orders can result in a member’s removal.
5. Winding Up: When a company decides to wind up its affairs, either voluntarily or due to financial difficulties, members may cease to be members once the winding-up process is complete.
6. Statutory Provisions: Different legal jurisdictions have specific rules governing how members can cease to be a part of a company, and these can vary widely.
The specific mechanisms and rules for membership changes depend on the type of company (corporation, LLC, partnership), the governing documents (articles of association, operating agreement, partnership agreement), and the applicable laws in the jurisdiction where the company is registered. It’s crucial for members to be familiar with and follow these rules and agreements.