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The Companies Act, 1956

Directors (Section 252 to Section 323)

Section 322 Directors, etc., with unlimited liability in limited company.

Section 322 Directors, etc., with unlimited liability in limited company.

(1) In a limited company, the liability of the directors or of any director or  manager may, if so provided by the memorandum, be unlimited.

(2) In a limited company in which the liability of a director or manager is unlimited, the directors and the  manager of the company ,and the member who proposes a person for appointment to the office of director or   manager, shall add to that proposal a statement that the liability of the person holding that office will be unlimited; and before the person accepts the office or acts therein, notice in writing that his liability will be unlimited, shall be given to him by the following or one of the following persons, namely, the promoters of the company, its directors,  or manager. if any, and its officers.

(3) If any director, manager or proposer makes default in  adding  such a statement, or if any promoter, director, manager or officer of the company makes default in  giving such a notice, he shall be punishable with fine which may extend to ten thousand rupees and shall also be liable for any damage which the person so appointed may sustain from the default; but the liability of the person appointed shall not be affected by the default.