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Maximum shareholder liability

I am going round in circles trying to ascertain what is the maximum shareholder liability where shares have been issued at a premium but only partly paid. The model articles (part 1/2) state that "the liability of the members is limited to the amount, if any, unpaid on the shares held by them (which I would interpret as including share premium)". The insolvency act (part IV, chpt 1 / 74) says (d) in the case of a company limited by shares, no contribution is required from any member exceeding the amount (if any) unpaid on the shares in respect of which he is liable as a present or past member. But nowhere can I see reference to whether the amount unpaid includes share premium. Can anyone clarify for me? Many thanks.


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Any suggestions or can anyone point me to a place of reference? Thank you.

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Look at it the other way

Equity shareholders are the last people to be paid in a liquidation. Therefore the share premium is as much at risk as is the nominal value.

If any part of the price of the shares is unpaid then the liquidator can obtain it from the shareholders.

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I don't think there is a reference as such

But logically, if the member has agreed to pay x for shares it doesn't matter whether or not x includes any premium - x is the amount he is liable for.

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As Cuchulainn implies  there is no reference because it is implicit.


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Thanks both

Thank you for your comments - they certainly make sense. However I have since seen in Ewan MacIntyre's book on business law he sates that: -

"A share premium is an additional amount over and above the nominal value of a share which the person taking the share from a company agrees that the will pay for the share. A member of a company who has agreed to pay a share premium can be called upon by that company to pay the premium. However, on liquidation the creditors cannot insist that a share premium is paid. They can insist that any unpaid amount of the nominal share value be paid."

Could there be a difference here between the shareholder's liability with the company - ie what they have agreed to pay to the company for the share, and the shareholder's liability to creditors should the company go bust? 

I've done a lot of web surfing on the subject and Ewan's statement is not the only that I have seen regarding the liability being restricted to any unpaid nominal amount. However there are also as many references to the liability being that of the total unpaid amount.

A little confused by it all now!


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Implicit in your original question is an assumption that the person who made the part payment for shares is a 'share holder'. So, it is important to check if the Articles do allow issue of partly paid shares!! Normally the terms of issue would specify payment deadlines and a failure to make the payment could even lead to forfeiture of shares.


Unless subscribing to the memorandum, issue of shares includes the company making an 'offer'  and a person 'accepting' it. In that sense there is a contractual obligation to make the payment for the shares.

As for the liability is concerned, so long as there is an obligation to pay for the shares, there is a contractual obligation to pay for the premium too!

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