To what extent is a member of a company limited by guarantee personally liable for the company's debts?

In a company limited by guarantee, the liability of its members is specifically defined in terms of the amount they have agreed to contribute to the company in the event of its winding up. This structure is designed to protect members from incurring personal liability for the company's debts beyond their agreed contribution.

When a company limited by guarantee is wound up, the members are only required to pay the amount they stipulated in the statement of guarantee. This means that if the company is unable to pay its debts, the members will only be held accountable for the specific amount they have guaranteed, rather than for the company’s debts in full. This feature provides a safeguard for members, allowing them to engage in the company's activities without exposing their personal assets beyond their guaranteed amount.

The correct answer highlights this limitation on personal liability, emphasizing that it is contingent upon the process of winding up and is strictly confined to the amount specified in the statement of guarantee. This ensures members do not face unexpected financial burdens arising from the company’s financial obligations beyond that set limit.