A company has received request for transfer of 1000 fully paid equity shares. The transferor has submitted the duly signed share transfer form for 1000 shares. It is learnt that the transferee is fifteen years old grand

The Companies Act, 2013 does not impose any restrictions on the qualification of membership in the company. Membership confers a right enforceable in law. Hence the appropriate provisions of the Contract Act, 1872 are to be taken in to consideration. It is well settled principle in law in India that a contract with minor is null and void. A member who is not a sui juris e.g., a minor, is wholly incompetent to enter into a contract and as such cannot become a member of a company. Consequently, an agreement by a minor to take shares is void ab-initio. It has been held by the Company Law Board (replaced by the Tribunal under the Companies Act, 2013) that an agreement in writing for a minor to become a member may be signed on behalf of the minor by his lawful guardian and the registration of transfer of shares in the name of the minor, acting through his or her guardian, especially where the shares are fully paid cannot be refused on the ground of the transferee being a minor [Miss Nandita Jain v. Benett Coleman and Co. Ltd., Appeal No. 27 of 1972 dated 17.2.78]. After attaining majority, the minor, if he does not want to be a member, must repudiate his liability on the shares on ground of minority, and if he does so, the company can not plead estoppel on the ground of his having received dividends during his minority or that he had fraudulently misrepresented his age in his application for shares [Sadiq Ali v. Jai Kishori, (1928) 30 Bom. L.R. 1346]. In the present case of a fully paid share, there is no scope of any further liability, as further call money is not payable and the liability is limited. The shareholder is entitled only to the benefits of shareholding in the company. On the basis of this principle, a minor can be admitted to the benefits of shareholding in the company. Hence a minor can be a transferee of the shares in a company. The company can carry out the share transfer. Though, the Company also has the option to refuse to register the transfer, unless the transfer is made through the legal guardian.