We have discussed Section 72 of the Companies Act, 2013 dealing with power to nominate by a security holder earlier here.
Rule 7 of the Companies (Share Capital and Debentures) Rules 2014 makes detailed provision for this purpose.
Clause 55 of Section 2 says that member in relation to a company means –
(a) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration shall be entered as member in its register of member;
(b) every other person who agrees in writing to become a member of the company and whose name is entered in the register of the company; and
(c) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.
On the other hand, a holder of a debentures is called a debentures – holder.
Free transferability of share is one essential condition for Company form of business, subject to some restrictions under private companies. New Act, deals with substantially.
TRANSFER AND TRANSMISSION OF SECURITIES (SECTION 56):
A company shall register a transfer of securities or interest of members only when such a proper instrument of transfer; duly stamped, dated and executed by or on behalf of the transferor and transferee and specifying the name, address and occupation has been delivered to the company by either party within a period of sixty days from date of execution, along with the certificate of security or the letter of allotment of securities.