Hmmmm…. Questions are little bit tricky, but even though my answer is yes subject to some conditions. As per Contract Act, a minor is incompetent to enter into any contract. Therefore, a company cannot allot shares to minor as it can’t enforce a minor to pay money due to incompetency of minor. But a share can be transferred or gifted or passed on to him by way of transmission of shares.
Thus, a minor can become shareholder of company by following 3 methods only:
- When shares are gifted to him or
- When shares are transferred to him or
- When shares are passed on to him by transmission
And one more thing is that, only fully paid equity or preference shares can be transferred or gifted to a minor as no one can enforce a minor to make payment of dues or money.
Therefore, only fully paid up capital shares can be transferred or gifted to a minor. And thus, in these ways a minor can become shareholder of company and can hold shares of a company.
Relevant Case Laws:
- Diwan Singh v. Minerva Films Limited (1959): the Honourable Punjab High Court held that there is no legal bar to minor becoming a member of a company by acquiring shares (by way of transfer) provided the shares are fully paid and no further obligation or liability is attached to them.
Minor can become member by transfer or transmission, but a company may not allow a minor to be a member by allotment.