The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 564. Modes of winding-up
(1) The winding-up of a company may be effected—
(a) by the Court ;
(b) voluntarily ; or
(c) subject to the supervision of the Court.
(2) The provisions of this Act with respect to winding-up apply, unless the contrary appears, to the winding-up of a company by any of those modes.
Section 565. Liability as contributories of present and past members
In the event of a company being wound up, every present and past member is liable to contribute to the assets of the company as provided in section 117 of this Act.
Section 566. Definition of contributory
The term, “contributory” means every person liable to contribute to the assets of a company in the event of its being wound up, and for the purposes of all proceedings prior to the final determination of the persons who are to be deemed contributories, the expression includes any person alleged to be a contributory.
Section 567. Nature of liability of contributory
(1) The liability of a contributory creates a debt of the nature of an ordinary contract debt accruing and due from him at the time when his liability commenced, but payable at the time when calls are made for enforcing the liability.
(2) An action to recover a debt created by this section shall not be brought after the expiration of six years from the date on which the cause of action accrued.
Section 568. Contributories in case of death of member
(1) If a contributory dies either before or after he has been placed on the list of contributories, his personal representatives, heirs and devisees, are liable in due course of administration to contribute to the assets of the company in discharge of his liability and they are contributories accordingly.
(2) Where the personal representatives are placed on the list of contributories, the heirs or devisees need not be added but they may be added as and when the Court deems fit.
(3) If the personal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the whole or any part of the estate of the deceased contributory, and for compelling payment out of it of the money due.
Section 569. Contributories in case of bankruptcy of member
(1) If a contributory becomes bankrupt, either before or after he has been placed on the list of contributories, then—
(a) his trustee in bankruptcy shall represent him for the purposes of the winding-up, and shall be a contributory accordingly, and may be called—
(i) on to admit to proof against the estate of the bankrupt, or
(ii) to allow to be paid out of his assets, any money due from the bankrupt in respect of his liability to contribute to the assets of the company ; and
(b) there may be proved against the estate of the bankrupt the estimated value of his liability to future calls as well as calls already made.
(2) The provisions of this section extend and apply with all necessary changes to the case of an insolvent person.
What this means
Short answer
A company can be wound up by the court, voluntarily, or under the court’s supervision (section 564). In a winding up, present and past members are contributories who can be made to contribute to the assets (sections 565 and 566). The liability is an ordinary contract debt, and an action for it cannot be brought after six years (section 567).
The three modes
Section 564 says a company’s winding up may be carried out by the court, voluntarily, or subject to the supervision of the court, and the Act’s winding-up provisions apply to each unless the contrary appears. See winding up by the court and voluntary winding up.
Contributories
- In a winding up, every present and past member is liable to contribute to the company’s assets as section 117 provides (section 565). See members and the register of members.
- A contributory is every person liable to contribute to the assets in a winding up. Before the final list is settled, the term includes anyone alleged to be a contributory (section 566).
- The liability is a debt of the nature of an ordinary contract debt accruing when the liability began, payable when calls are made. An action to recover it must be brought within six years of the cause of action accruing (section 567).
Death and bankruptcy of a contributory
If a contributory dies, before or after being placed on the list, his personal representatives, heirs and devisees are liable in due course of administration. If the representatives are on the list, the heirs and devisees need not be added unless the court decides. If they default, proceedings can be brought to administer the estate and compel payment (section 568). If a contributory becomes bankrupt, his trustee in bankruptcy represents him and is a contributory. The estimated value of his liability to future calls, as well as past calls, can be proved against the bankrupt estate. The same applies to an insolvent person (section 569).
Questions and answers
What are the modes of winding up?
By the court, voluntarily, or voluntarily subject to the supervision of the court (section 564).
Who is a contributory?
Every person liable to contribute to the assets of a company in a winding up, including anyone alleged to be one before the list is settled (section 566).
How long do you have to sue a contributory?
Six years from the date the cause of action accrued (section 567(2)).
What happens if a contributory dies?
His personal representatives, heirs and devisees are liable in due course of administration (section 568).
Spotted a mistake? Tell us and we will check it.