ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Amira owns all the shares in Zenith Ltd, a limited company. Zenith Ltd cannot pay a supplier debt of 80,000 and is wound up. Amira has paid for her shares in full. What is Amira's normal legal position?
Amira is not personally liable for the 80,000 debt. Zenith Ltd is a separate legal entity and its shareholder's liability is limited to any unpaid amount on her shares. Because her shares are fully paid, her loss is limited to her investment.
- AShe must personally pay the 80,000 because she is the sole owner
- BShe is not liable for the debt because the company is a separate legal entity with limited liabilityCorrect
- CShe is liable for half the debt because the company has only one member
Explanation
Limited liability means a shareholder risks only the amount unpaid on their shares. Amira has fully paid, so she has no further liability. Being the sole owner does not remove separate legal personality, so the first option is wrong.
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