In the case of a limited company, any person who is or has been a director or manager, whose liability is unlimited under the provisions of this Act, shall, in addition to his liability, if any, to contribute as an ordinary member, be liable to make a further contribution as if he were at the commencement of winding up, a member of an unlimited company:
Provided that:
a. a person who has been a director or manager shall not be liable to make such further contribution, if he has ceased to hold office for a year or upwards before the commencement of the winding up;
b. a person who has been a director or manager shall not be liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office;
c. subject to the articles of the company, a director or manager shall not be liable to make such further contribution unless the Tribunal deems it necessary to require the contribution in order to satisfy the debts and liabilities of the company, and the costs, charges and expenses of the winding up.
Legal Commentary & Landmark Judgments: Section 286
Section 286 of the Companies Act, 2013 regulates the extended liability of directors and managers whose liability is unlimited under the company's constitution, governing their contribution obligations toward corporate debts and liquidation expenses subject to statutory safe harbours.
When defending a former director whose liability was unlimited under the Memorandum of Association, counsel must scrutinize Form DIR-12 and RoC records to establish that the director resigned more than one year prior to the presentation of the winding-up petition, thereby invoking the absolute statutory safe harbour under Section 286(1)(a).