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ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality

Halden Partners is an unlimited company with share capital. It is wound up and its assets fall 300,000 short of its debts. It has three members, Ivo, Jana and Kofi, with no unpaid amounts on their shares. Which statement is correct?

The members can be required to contribute to cover the 300,000 shortfall. An unlimited company is still a separate legal person, but its members' liability to contribute on winding up has no limit, unlike members of a limited company.

  1. AThe members are not liable, because the company is a separate legal person
  2. BThe members can be required to contribute to meet the shortfall, as their liability is not limitedCorrect
  3. CThe members' liability is limited to the nominal value of their shares

Explanation

An unlimited company has separate legal personality, but its members have no limit on their liability to contribute on a winding up. They can therefore be called on to cover the 300,000 shortfall. The first option wrongly treats separate personality as meaning limited liability. The third describes a limited company, and in any case the shares are already fully paid.

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