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

Mara and Jon run a business through a private company limited by shares. The company cannot pay its debts, and each of them still owes 200 on shares they hold. The company owes suppliers 50,000. What is the maximum amount Mara can be required to contribute towards the company's debts in respect of her shareholding?

Mara's liability is limited to the 200 still unpaid on her shares. A company limited by shares restricts members' liability to the unpaid amount, so she cannot be made to pay the company's 50,000 trade debts personally.

  1. ANothing, because shareholders are never liable for company debts
  2. BHer unpaid 200 only, if the company is wound upCorrect
  3. C50,000, because she is a founder
  4. DHalf of the 50,000, as there are two shareholders

Explanation

In a company limited by shares, a member's liability is limited to any amount unpaid on their shares. Mara can therefore be called upon for her unpaid 200 only. The 50,000 option ignores limited liability, and splitting the debt between shareholders has no basis.

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