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The question was:
“J runs her own shoes shop “J’s Shoes Limited”. Which answer best describes the extent of J’s liability in the event of business having to close by reason of its debts?
A – Limited to the extent of fair value of business net assets.
B – Limited to the amount as yet unpaid on any shares held by J.
C – No limit to the extent of J’s liability.
D – Limited to the extent of nominal value of shares held by J.”I thought in this case it would mean J was the sole trader so I chose C, but the correct answer is B. Could you please help explain the reason behind this?
Many thanks,
“J’s Shoes Limited” is a limited company … a separate legal entity, separate and distinct from those that manage the company’s affairs and separate from those that are beneficially interested in the success or failure of the company
The extent of any company member’s liability is limited to the amount, if any, as yet unpaid on shares held by that member
OK?
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