Friday, 18 April 2014

12.8.9 (Liability of Members)

A member is also subject to certain liabilities and obligations either by the Act or by the Articles. Some of the important ones are stated hereunder:

            (1) If shares are not allotted for a consideration other than cash, then a member must pay the whole nominal value of his shares in cash.

            (2) It a member is holding partly paid-up shares and the company goes into liquidation, then he becomes liable as contributory to pay, if called upon lo do so, towards the assets of the company(s.429).

            (3) A person may be included in the ‘B’ list of contributories, as a past member and required to pay to the extent of the amount remaining unpaid on the shares which he held within one year prior to the commencement of winding up, if (i) on the commencement of winding up, debts exist which were incurred while he was a member; and (ii) the contributories of the 'A' list (i.e., present members) are not able to satisfy the contribution required from them in respect of their shares.

            (4) As mentioned earlier, the liability of members becomes unlimited and several, even in the case of a limited liability company (s.45).

            (5) A member is bound to the company by all the covenants of the Articles e.g., a company may have a paramount lien on a member's shares for any amount due from him to the company.

            (6) In the case of company limited by guarantee, the member may be asked to
contribute to the extent of his guarantee at the time of winding up.

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