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Contributories

Chapter 40

February 2006

PART 8

40.130 Definitions

A ‘contributory’ is a person liable to contribute to the assets of a company in the event of it being wound up [note 1]. Any present and past member is a contributory [note 2] subject to certain qualifications as to liability [note 3].

A ‘Member’ is defined as a subscriber to the memorandum, and those who have agreed to become members and whose names are entered in the register of members [note 4]. A person to whom shares have been transferred or transmitted by operation of law is also to be regarded as a member of the company for the purposes of the Insolvency Act 1986. [note 5].

 

40.131 Qualifications as to liability

In a company limited by shares the contribution is limited to the amount of any unpaid calls on the shares [note 6].

In a company limited by guarantee the contribution is limited to the amount undertaken to be contributed by the contributory [note 7].

 

40.132 The rights of a Contributory

A contributory has similar rights to a creditor (see Part 11, paragraphs 40.160 to 40.175 for further details) in relation to the winding up of the company: 
    • to petition for the winding up of a company [note 8].
    • to inspect proofs [note 9].
    • to object to a decision to admit or reject proof [note 10].
    • inspection of records, with permission of the court [note 11].
    • to request the liquidator to call a general meeting of contributories, either by resolution or in writing by one-tenth in value of the contributories [note 12].
    • by three quarters in value, requisition a Public Examination [note 13].
    • apply to the court to confirm, reverse or modify any act or decision of the liquidator by which the contributory is aggrieved [note 14].
    • If the winding-up order was not made wholly or partly on the grounds that the company was unable to pay its debts, i.e. in a ‘solvent’ liquidation, the contributories may also appoint up to three of their number to serve on any committee established by the creditors [note 15].
    • If the creditors do not establish a liquidation committee, the meeting of contributories may appoint one of its number to apply to the court for a further creditors' meeting to be summoned for the purpose of establishing a committee [note 16].
    • to nominate and vote for a liquidator [note 17].

 

40.133 Distribution to members

Any surplus funds remaining after satisfaction in full of the liabilities to creditors is distributable to the members of the company according to their rights and interests. Details of how contributories should be paid are given in Chapter 36A - Distributions, Part 8).

 

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