Surplus
Assets.

262

SECRETARIAL PRACTICE
seem that a person cannot claim preferential payment as a
‘workman or labourer,” unless he can prove a contract of
service [General Radio Company (1929), W.N. 172].

After the above debts have been paid, the liquidator will
then proceed to pay the other creditors as far as possible, by
means of one or more dividends. Subject as provided by s.
157 (I) (g) as regards debts due to a member in his character
of a member, e.g. for dividends declared, all creditors must be
treated alike and receive a proportionate amount of their
respective debts. If all creditors have been paid in full and
assets still remain, then it is the duty of the liquidator, under
S. 247, unless it is otherwise provided by the articles of the
company, to distribute the money in hand among the members,
according to their rights and interests in the company.
S. 248 provides that the liquidator shall adjust the rights
of the contributories among themselves, and empowers
him to make calls for the purpose. The rights of the members
must be ascertained from the memorandum and articles,
and the available assets distributed in accordance therewith.
Very difficult questions frequently arise as to how, in the
particular circumstances, having regard to the provisions
of the memorandum and articles, the assets should be dis-
tributed, and legal advice is often sought by the liquidator
as to how he should proceed, or he not infrequently applies
to the Court under s. 252.

A few general principles may, however, be noticed. If
the memorandum and articles are wholly silent as to the
rights of members on a winding up, the liquidator’s first duty
is to pay off the paid-up capital. If the assets do not allow
the whole of the paid-up capital to be paid off, the liquidator
must first repay those shareholders who have paid up a
larger amount than others, in proportion to the number
of shares held by them, the excess which they have so paid,
and, if necessary, he must make a call upon those who have
paid the lesser amount, so as to equalise matters. To take a
simple concrete instance, suppose that in a company with an
issued capital of 3,000 shares of £1 each, of which 2,000 are
paid up to the extent of 10s. and 1,000 to the extent of 5s.,
the liquidator, after paying all expenses and all creditors,
has a sum of £50 in hand. If this were returned to the holders
of the 2,000 shares, 10s. paid up, the result would be merely
to return 6d. per share, and these shareholders would be at a
disadvantage. The liquidator’s duty, accordingly, is to
make on the holders of the 1,000 shares, 5s. paid, a call of
3s. per share, which will enable him to return an additional
1s. 6d. per share to the holders of the 2.000 shares. thus