Rita applied for 2,000 shares in Bidii Yako Company Ltd. following her application, no allotment at the time was made. Later on without her application, 2,000 shares were transferred to her and her name placed in the register of members. Rita knowing that her name was in the register of members took no steps to have it rectified. Later on, the company collapsed. Rita was called upon to pay up on her shares and she has declined to do so arguing that she was not a member of Bidii Yako Company Ltd. She seeks your advice on the matter. Advise Rita.

• This problem is based on the membership and the liability of members in the event of winding up.
• Ritas application for 2000 shares in Bidii Yako Co. Ltd was not accepted within a reasonable time and hence lapsed.
• However, subsequently, Bidii Yako Co. Ltd transferred shares to her and inserted her name in the register of members a fact rita was aware of but failed to rectify the situation.
• Rita is for all intents and purposes a member of Bidii Yako Co. Ltd an is therefore liable to pay the amount outstanding on her shares.
• Rita is a member by estoppel and cannot deny her apparent membership.
• She is liable as a contributory.
• My advise to her is to pay up the amount due on the 2000 shares.
• My advise is based on the fact that she is a member of the company and the provisions of Companies Act on the liability of contributories.