Skip to content

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

Karel owns shares in Veldt Co, an unlimited company. Veldt Co is wound up with debts that exceed its assets by 90,000, and Karel and one other member hold equal numbers of shares and are both solvent. Which statement best describes Karel's position?

Karel can be required to contribute to the deficit with no ceiling arising from the company's status. Members of an unlimited company bear unlimited liability on winding up, so separate personality does not shield him as it would in a limited company.

  1. AHe is liable only for any unpaid amount on his shares
  2. BHe may be required to contribute to the deficit without any upper limit set by the company's statusCorrect
  3. CHe is liable for nothing because the company has separate legal personality
  4. DHis liability is capped at the nominal value of his shares

Explanation

Members of an unlimited company have no limit on their liability to contribute to the company's debts on winding up. Separate personality does not protect them from this. Limiting liability to unpaid share amounts describes a company limited by shares, which is the key distractor.

Did you get it right without looking?

One question tells you little. A timed set on Corporations and legal personality shows your real accuracy, how long you take and where you lose marks.

Practise Corporations and legal personalityFree diagnostic mock

More Corporations and legal personality questions