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Liabilities of The Members in the Event of Winding Up of a Company:-
As per the section 426 of the Company Act 1956, in the event of winding up of a company every present and past members shall be liable to contribute to the assets of the company to a sufficient amount:
- For the payment of :
· Its debts and liabilities
· Cost, Charges and expenses of the winding up
- For the adjustment of the rights of the contributories among themselves
1. The liabilities of the Present Members i.e. As per the List A shall be limited
- In case of a company limited by shares:- To the amount remaining unpaid on the shares and
- In case of a company limited by guarantee:- To the amount undertaken to be contributed by him to the assets and liabilities of the company in the event of its being wound up
2. Liabilities of the Past Members i.e. As per the List B should be nil or shall not be liable to contribute :-
- If he has ceased to be the members for 1 year or more before the commencement of winding up
- In respect of any debt or liability of the company contracted or raised after he ceased to be a member
- If it appears to the court that the present members will be able to satisfy the contributions required to be made by them
The past members can be called upon only after the court has called upon the contribution in the list A to pay and the list A’s contributions are found insufficient. But the past members shall not be liable to contribute more than the amount unpaid on the shares.
For Example:
A Gang of Khiladee Limited was wound up with effect from 12.12.2012 by the order of court. Mr. Khiladee ceases to be a member of the company from 11.11.2011, has receive the notice from the liquidators that he should deposit a sum of Rs. 1,00,000 as his contribution towards the liability of the shares previously held by him. In this context explain whether Mr. Khiladee can be called a contributory and whether he can be liable and whether there is any limitation on his liability.
As per the provision of the section 426 of the company Act. 1956(mention above) Mr. Khiladee will not be liable unless it appears to court that the present member’s contribution are found insufficient because Mr. Khiladee ceases to be members of this company for more than one year( from 11.11.2011 to 12.12.2012). Even court order Mr. Khiladee will liable only to the extent of amount unpaid on the shares.
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