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Section 285- The Companies Act, 2013

Updated: May 9


Introduction

Winding up is a method to put a company to an end. It is a process where the life of a company comes to an end and its property is administered for the benefit of its creditors and its members. The tribunal has the authority to confiscate the company's assets and order them to be used to meet its liabilities. To this end, the tribunal has the authority to create a list of shareholders who are obliged to contribute to the company's assets. According to Section 2(26), Contributory means a person liable to contribute towards the assets of the company in the event of its being wound up.


Settlement of list of contributories and application of assets [Section 285]

As soon as after passing of winding up order by Tribunal, Tribunal shall:

  • Settle a list of contributories,

  • Cause rectification of register of members,

  • Cause assets of the company to be applied for the discharge of its liability (Tribunal may dispense with this, where it appears to the Tribunal that it would not be necessary to make a call or adjust right to contributories.)

While settling the list of contributories, Tribunal shall include past and present members for payment of:

  1. Debts and liabilities of the company,

  2. Cost, charge, and expenses of winding-up and

  3. Adjustment of the right of contributories among themselves

Subject to the following conditions (Limitation in liability of members):

1. Past members shall not be liable to contribute

  • If he ceased to be a member for 1 year or more before the commencement of winding-up

  • With respect to debt and liability of the company contracted after he ceased to be a member

  • Unless it appears to Tribunal that present members are unable to satisfy the contribution required to be made by them.

2. Maximum liability of past and present members in case of

  • Company limited by shares -> Amount unpaid or shares held by members

  • Company limited by guarantee -> Amount undertaken to be contributed by the member in event of winding-up


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