‘S’ subscribed 200 shares to the memorandum of a company. The company was duly registered and after registration of the company, ‘S’ took only 20 shares. Subsequently, the company was wound up. Is ‘S’ liable for 200 shares or only 20 shares?
If a person has subscribed to the Memorandum of Association, then he is bound by the no. of shares he has subscribed to the Memorandum of Association.
In the event of winding up, he is liable for the full shares he has subscribed to the Memorandum of Association and not merely the shares for which he paid after incorporation of the company.
The same view was held in Sulaiman Bhai Vs. Official Liquidator, wherein the Court held that Sulaiman was liable to pay for all the 200 shares, even though he took only 20 shares after incorporation of the company.