(1)When a company is wound up, every present and past member is liable to contribute to its assets to any amount sufficient for payment of its debts and liabilities, and the expenses of the winding up, and for the adjustment of the rights of the contributories among themselves.
(2)This is subject as follows—
(a)a past member is not liable to contribute if he has ceased to be a member for one year or more before the commencement of the winding up;
(b)a past member is not liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member;
(c)a past member is not liable to contribute, unless it appears to the court that the existing members are unable to satisfy the contributions required to be made by them . . . ;
(d)in the case of a company limited by shares, no contribution is required from any member exceeding the amount (if any) unpaid on the shares in respect of which he is liable as a present or past member;
(e)nothing in the Companies Acts or this Act invalidates any provision contained in a policy of insurance or other contract whereby the liability of individual members on the policy or contract is restricted, or whereby the funds of the company are alone made liable in respect of the policy or contract;
(f)a sum due to any member of the company (in his character of a member) by way of dividends, profits or otherwise is not deemed to be a debt of the company, payable to that member in a case of competition between himself and any other creditor not a member of the company, but any such sum may be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves.
(3)In the case of a company limited by guarantee, no contribution is required from any member exceeding the amount undertaken to be contributed by him to the company’s assets in the event of its being wound up; but if it is a company with a share capital, every member of it is liable (in addition to the amount so undertaken to be contributed to the assets), to contribute to the extent of any sums unpaid on shares held by him.
Cases considering section 74 13
[2017] UKSC 38 · 17 May 2017Interprets
The provision permits calls on members to meet non-provable liabilities, but not to create the surplus upon which liability for statutory interest depends. Its reference to liabilities is not confined to provable debts. (see paras [130]-[148])
[2015] EWCA Civ 485 · 14 May 2015Limits
Section 74 is the statutory source of members’ liability to contribute when a company is wound up. The court construes that liability in conjunction with section 74(1) and the waterfall (see paras [172]-[177]).
Section 74(1) is interpreted as extending contributories’ liability to proved debts, statutory interest, non-provable liabilities and adjustment of contributories’ rights. The fruits of a call become company assets available through the waterfall (see paras [172]-[203]).
Section 74(2) is identified as imposing statutory limitations on past members and limited liability. It is relevant to the distinction between unlimited members’ liabilities and liabilities limited by shares or guarantee (see paras [172], [182]).
Section 74(2)(a) is mentioned as one provision allowing a contributory’s exposure to change before a call. The court treats such protections as matters capable of affecting the valuation of a contingent liability (see para [220], [227]).
Section 74(2)(b) is mentioned as one provision allowing a contributory’s exposure to change before a call. The court treats such protections as matters capable of affecting the valuation of a contingent liability (see para [220], [227]).
Section 74(2)(c) is mentioned as one provision allowing a contributory’s exposure to change before a call. The court treats such protections as matters capable of affecting the valuation of a contingent liability (see para [220], [227]).
Section 74(2)(d) is identified as limiting a member of a company limited by shares to the amount unpaid on shares. The limitation does not apply to the unlimited-company liability considered here (see para [172]).
Section 74(3) is identified as protecting members of companies limited by guarantee from unlimited liability. It is cited only as part of the statutory limitations on contributory liability (see para [172]).
[2026] EWHC 1228 (Ch) · 21 May 2026Interprets
The court held that, on the better view, a member’s claim for repayment of share capital would be deferred behind ordinary unsecured creditors in a winding up, supporting the conclusion that CGF had been preferred. (see paras [748]-[754])
1 more judgment, and what each says about section 74, are in the
case-law panel in the full Act.