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

Hamid's business, Brightway Ltd, has 100 issued shares of 1 each, of which Hamid holds 60, all fully paid. Brightway Ltd goes into insolvent liquidation owing creditors 90,000. Which statement is correct about Hamid's liability, assuming no guarantee and no wrongdoing?

Hamid owes nothing further. In a company limited by shares, a member's liability is restricted to any amount unpaid on their shares. His shares are fully paid, so creditors cannot claim the 90,000 shortfall from him personally.

  1. AHe must pay 60% of the debts, being 54,000
  2. BHe is liable for all 90,000 as majority shareholder
  3. CHis liability to the company is limited to any unpaid amount on his shares, which is nilCorrect
  4. DHe is liable for 40 as the remaining unissued shares

Explanation

A member's liability in a company limited by shares is limited to the amount unpaid on their shares. Hamid's shares are fully paid, so he owes nothing further. Option A wrongly applies a proportion of debts, which would apply only with unlimited liability.

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