Insolvency Act 1986

76 Liability of past directors and shareholders

(1) This section applies where a company is being wound up and—

(a) it has under Chapter VII of Part V of the Companies Act (redeemable shares ; purchase by a company of its own shares) made a payment out of capital in respect of the redemption or purchase of any of its own shares (the payment being referred to below as " the relevant payment"), and

(b) the aggregate amount of the company's assets and the amounts paid by way of contribution to its assets (apart from this section) is not sufficient for payment of its debts and liabilities, and the expenses of the winding up.

(2) If the winding up commenced within one year of the date on which the relevant payment was made, then—

(a) the person from whom the shares were redeemed or purchased, and

(b) the directors who signed the statutory declaration made in accordance with section 173(3) of the Companies Act for purposes of the redemption or purchase (except a director who shows that he had reasonable grounds for forming the opinion set out in the declaration),

are, so as to enable that insufficiency to be met, liable to contribute to the following extent to the company's assets.

(3) A person from whom any of the shares were redeemed or purchased is liable to contribute an amount not exceeding so much of the relevant payment as was made by the company in respect of his shares; and the directors are jointly and severally liable with that person to contribute that amount.

(4) A person who has contributed any amount to the assets in pursuance of this section may apply to the court for an order directing any other person jointly and severally liable in respect of that amount to pay him such amount as the court thinks just and equitable.

(5) Sections 74 and 75 do not apply in relation to liability accruing by virtue of this section.

(6) This section is deemed included in Chapter VII of Part V of the Companies Act for the purposes of the Secretary of State's power to make regulations under section 179 of that Act.