Corporate and Other LawsMCQQuestion 12513 of 300
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Under Section 3A of the Companies Act, 2013, if the number of members of a company falls below the statutory minimum and the company carries on business for more than six months, who is severally liable for the payment of the whole debts contracted during that period?

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option A — Every member who is cognizant of the fact that it is carrying on business with fewer than the required members

All Options:

  • AEvery member who is cognizant of the fact that it is carrying on business with fewer than the required members ✓
  • BOnly the Managing Director and Key Managerial Personnel
  • CAll directors irrespective of their knowledge
  • DThe Registrar of Companies through official liquidator

Detailed Solution & Explanation

Correct Answer: Option **A** (Every member who is cognizant of the fact that it is carrying on business with fewer than the required members) **Statutory Provision (Section 3A - Members Severally Liable in Certain Cases):** Section 3A provides that if at any time the number of members of a company is reduced, in the case of a public company, below seven, in the case of a private company, below two, and the company carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact shall be severally liable for the payment of the whole debts of the company contracted during that time. Therefore, Option A is the correct legal position under the ICAI curriculum.

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