# Liability After Reduction of Share Capital — Section 66 (Tail-End Provisions)
When a company's share capital is reduced, certain protections continue to exist for creditors who were left out of the reduction process. These rules sit at the tail-end of Section 66.
## 1. Liability of Members for Omitted Debts
If a creditor's debt was omitted from the list of creditors at the time of reduction (because the creditor was unaware of the proceedings and could not object), then:
- Who is liable? Every person who was a member of the company on the date of registration of the reduction order by the Registrar.
- What is the liability? To contribute towards payment of that debt or claim.
- Ceiling on liability? The amount the member would have been liable to contribute if the company had commenced winding up on the day immediately before the registration date.
This means liability is capped at the winding-up contribution amount — the reduction does not enlarge a member's exposure beyond what winding-up would have produced.
## 2. If the Company is Wound Up
If the company actually goes into winding up, on the application of such an omitted creditor (and proof of his ignorance of the reduction proceedings), the Tribunal may:
(a) Settle a list of persons so liable to contribute, and
(b) Make and enforce calls and orders on the contributories on the list, treating them as ordinary contributories in winding up.
## 3. Rights of Contributories Inter Se Preserved
Sub-section (9) is an overriding provision. Even though contributories may be made liable as above, nothing in sub-section (8) affects the rights of the contributories among themselves (e.g., the right of indemnity or contribution between them).
## 4. Punishment of Officers — Section 447
An officer of the company will be punishable for fraud under Section 447 if he:
(a) Knowingly conceals the name of any creditor entitled to object to the reduction, or abets/is privy to such concealment; or
(b) Knowingly misrepresents the nature or amount of any creditor's debt or claim, or abets/is privy to such misrepresentation.
## Key Definitions
- Abet — to encourage or incite another to commit a crime.
- Privy — a co-participant; one who has an interest in the matter.
- Period of Limitation — the maximum period set by statute within which a legal action can be brought or a right enforced (Limitation Act, 1963).