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Question:
According to English Law, the amount as yet unpaid on shares issued by a company is called as “reserve liability”. This is a liability of which of the following?
(A) The company
(B) The membersDear Sir,
Can you please confirm whether the answer is (A).
Is it because the company hasn’t yet received the proceeds from the unpaid shares that it is called a reserve liability for the company?“The Company” is, if you think about it, the aggregation of its members.
According to the Companies Act” the wording specifically states that “the amount unpaid on partly-paid shares is a reserve liability of the company”
Other than by quoting the law to you, I can’t explain any deeper WHY it’s called that except as in accordance with my opening paragraph
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