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CA Foundation · Business Laws · The Companies Act, 2013

Anita holds 1,000 fully paid shares of Kaveri Industries Ltd, which was later wound up with large unpaid debts. A creditor asks Anita to pay the company's debts from her personal savings. What is Anita's position?

Anita has no further liability. In a company limited by shares, a member's liability is limited to the amount unpaid on her shares. Because her 1,000 shares are fully paid, nothing remains payable and creditors cannot reach her personal savings.

  1. AShe must pay all the company's debts as she is a member
  2. BShe must pay the debts only if she is a director
  3. CShe has no further liability since her shares are fully paidCorrect
  4. DShe must pay half of the debts as a shareholder

Explanation

In a company limited by shares, a member's liability is limited to the unpaid amount on the shares held. Anita's shares are fully paid, so nothing remains unpaid, and she cannot be asked to contribute from personal assets. Creditors can look only to the company's assets.

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