(i) Nolimit Private Company is incorporated as unlimited company having share capital of 10,00,000. One of its creditors, Mr. Samuel filed a suit…

(i) Section 2 (92) of Companies Act, 2013, provides that an unlimited company means a company not having any limit on the liability of its members. The liability of each member extends to the whole amount of the company’s debts and liabilities, but he will be entitled to claim contribution from other members. In case the company has share capital, the Articles of Association must state the amount of share capital and the amount of each share. So long as the company is a going concern the liability on the shares is the only liability which can be enforced by the company. The creditors can institute proceedings for winding up of the company for their claims. The official liquidator may call the members for their contribution towards the liabilities and debts of the company, which can be unlimited. On the basis of above, it can be said that Mr. Samuel cannot directly claim his dues against the company from Mr. Innocent, the shareholder of the company even the company is an unlimited company. Mr. Innocent is liable upto his share capital. His unlimited liability will arise when official liquidator calls the members for their contribution towards the liabilities and debts of the company at the time of winding up of company. (ii) A company registered under Section 8 of the Companies Act, 2013 is prohibited from the payment of any dividends to its members. Hence in the given case, the contention of the members to distribute dividend from the profits earned is wrong. Also, Section 8 company is allowed to call a general meeting by giving 14 days instead of 21 days.