Pioneer Ltd, a public company, has had only five members for the last ten months and continues to carry on business. Under section 3A, Mr. Rao, a member who knows this, is:

Correct answer: A) Severally liable for the payment of the whole of the debts contracted during the period after the first six months

Explanation

Section 3A applies where a public company's membership falls below seven, or a private company's below two, and the company carries on business for more than six months while so reduced. Every person who is a member during the period after those six months, and knows of it, is severally liable for the whole of the debts contracted during that period. He may be sued for them. The liability does not reach debts contracted earlier.