Section 98 — Companies Act 1993: Liability of former shareholders

98 Liability of former shareholders (1) A former shareholder who ceased to be a shareholder during the specified period is liable to the company in respect of any amount unpaid on the shares held by that former shareholder or any liability provided for in the constitution of the company for which that former shareholder was liable to the company if the Court is satisfied that the shareholders of the company are unable to discharge any liability— (a) For any amount unpaid on shares held by them; or (b) Expressly provided for in the constitution of the company. (2) A former shareholder is not liable under subsection (1) of this section for any debt or liability of the company contracted after ceasing to be a shareholder. (3) Subsections (1) and (2) of this section apply, with such modifications as may be necessary, in relation to an existing company that has become reregistered under this Act in accordance with the Companies Reregistration Act 1993 and as if the reference to a former shareholder included a reference to a person who was a member of the company before the reregistration of the company. (4) Where a person ceased to be a shareholder of a company before the liability of the shareholders of the company ceased to be limited and became unlimited and that person has not since become a shareholder of the company, that person is liable to the company only to the same extent as if the liability of the shareholders had remained limited. (5) Subsection (4) of this section applies, with such modifications as may be necessary, in relation to an existing company that has become reregistered under this Act in accordance with the Companies Reregistration Act 1993 , whether or not the liability of the shareholders ceased to be limited before, on, or after the reregistration of the company and as if the reference to a person who was a shareholder included a reference to a person who was a member of the company before reregistration. (6) For the purposes of subsection (1) of this section, specified period means— (a) A period of 1 year before the date of commencement of the liquidation of the company together with the period commencing on that date and ending at the time at which the liquidator is appointed; and (b) In the case of a company that has been put into liquidation by the Court, the period of 1 year before the making of the application to the Court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order was made; and (c) If— (i) An application was made to the Court to put a company into liquidation; and (ii) After the making of the application to the Court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),— the period of 1 year before the making of the application to the Court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation. Subsection (6)(a) was substituted, as from 26 April 1999, by section 2(1) Companies Amendment Act 1999 (1999 No 19). Subsection (6)(b) was amended, as from 3 June 1998, by section 2 Companies Amendment Act 1998 (1998 No 31) by adding the expression “ ; and ” . Subsection (6)(b) was further amended, as from 26 April 1999, by section 2(2)(a) Companies Amendment Act 1999 (1999 No 19) by inserting the words “ , and at the time at which, ” . Subsection (6)(c) was inserted, as from 3 June 1998, by section 2 Companies Amendment Act 1998 (1998 No 31). Subsection (6)(c) was amended, as from 26 April 1999, by section 2(2)(b) Companies Amendment Act 1999 (1999 No 19) by inserting the words “ and at the time ” .