Companies Act 2014 section 1278

Liability as contributories of past and present members

Section 1278 sets out the obligations of current and former members of an unlimited company to contribute towards its debts and winding-up costs, together with the qualifications and protections that limit those obligations.

• When an unlimited company is wound up, every current and past member is liable to contribute enough to cover the company's debts, liabilities, and winding-up expenses.
• A past member is protected from liability if they left the company more than one year before the winding up began, or if the debt arose after they ceased to be a member.
• Past members can only be called upon to contribute if the court finds that the current members are unable to meet the required contributions themselves.
• Any sums owed to a member in their capacity as a member — such as distributions or profits — are not treated as company debts ranking alongside outside creditors, but may be taken into account when adjusting rights among contributories.