The members of a company on the commencement of winding up are termed as contributory. As per Section 428 of the Companies Act, contributory means “Every person liable to contribute to the assets of the company in the event of its being wound up and includes holder of any shares which are fully paid-up.”
The liquidator shall prepare a list of all such contributories who may be made liable to contribute towards the assets of the company on account of deficiency in the assets of the company. In case there is a surplus in assets the liquidator shall prepare a list of those members who are entitled to share this surplus. The term ‘contributory’ includes members of both of these categories.
List of contributories is divided into two part, A and B. List A contains the names of all those persons who are members of the company on the date of the winding up (present members), while List B shall contain the names of those persons who were members during the period of 12 months preceding the date of the winding up (past members).
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ADVERTISEMENTS:
When does the liability of the contributory arise? A contributory shall be required to contribute towards the assets of the company in the following circumstances:
1. In case the assets fall short for the payment of company’s debts, liabilities and the cost of liquidation; or
2. In case money is required for the adjustment of the rights of contributories as between themselves. Holders of partly paid shares may be required to contribute in order to bring them at par with those shareholders who have paid in full.