reserve liability of a company

Where the law states that the ‘amount as yet unpaid on the issued shares is a reserve liability of the company’ you need to remember that the word ‘company’ represents the aggregation of the members of the company

The law might have said (probably more clearly!) that the amount as yet unpaid is a reserve liability of the people that in aggregation represent / are owners of the company but that has been condensed down to ‘a reserve liability of the company’

OK?

No – the liability is the liability of the members. Instead of paying the full nominal value of shares when they are issued, the members may be told that they only have to pay, say, 70 pence per £1 nominal value for each share that they are acquiring

The remaining 30 pence per share is a reserve liability of the members (collectively referred to as ‘the company’)

Hence the statutory expression ‘a reserve liability of the company’

No matter what the situation is in the life (and death) of a company, that liability rests with the members

When the company goes into liquidation, a liquidator has the power to call up that 30 pence per share from the members

Of course, it MAY be the case that the company is solvent at the commencement of the liquidation so a liquidator COULD decide that those extra 30 pences are not required for the purposes of paying off the company’s liabilities but I guess that that would be extremely unusual

If the company (whilst still a going concern) decides to call up the remaining 30 pence per share, the members will pay the respective amounts over into the company’s bank account and, at that point, the members will have settled their outstanding liability because the shares would now be correctly classed as ‘issued and fully paid’ instead of the previous title of ‘issued and 70 pence paid’ or ‘issued and partly paid’

Is that better?

You’re welcome