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Question
Justify the following statement.
Insolvent person ceases to be the Member of the company.
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Solution
A person having insufficient assets to meet debts and liabilities is called an insolvent. It is illegal for an insolvent person to enter into any contract or agreement with another person. When a member of a company is declared by the court of law as insolvent. His official receiver or assignee transfers his shares in favour of his creditor in settlement of his debts. On such transfer of shares, the membership of the insolvent member is terminated. Thus, an insolvent person ceases to be a member of the company.
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RELATED QUESTIONS
Select the correct answer from the options given below and rewrite the statement:
A person can be called as a Member when the name is entered in ________
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| 7) Duties of member | |
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| 9) Demand or claim money from the company | |
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