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Can u just explain what do u mean by limited by shares and limited by guarantee?
Went through your lectures couldn t grasp it?It is the extent your liability is limited by shares, I dont know. I would be pleased if u can explain in words over here.. I love text not a lecture person plus Kaplan doesnt explain it much clearly!!!
In both cases, the liability of a company’s members is limited.
So the difference between the two is the basis upon which that limited liability is calculated.
Where liability is limited by shares, in the event of an insolvent liquidation, a member that has an interest in a company limited by shares can be required by the liquidator to pay cash into the company but the limit of that required payment is “the amount (if any) as yet unpaid on shares held by them”
So a $1 share, 70 cents paid, means that the shareholder may be required to pay in 30 cents on each of the shares held by that member …… but no more than that
Where liability is limited by guarantee, in the event of an insolvent liquidation, a member that has an interest in a company limited by guarantee can be required by the liquidator to pay cash into the company but the limit of that required payment is “the amount (if any) that the member has guaranteed to pay”
Typically, this guaranteed amount would be just $1
Better?
Bravo.. Thank U soo much…
Doing the exam this thursday feeling better, but some of your OT section b questions are hard
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