Advertisements
Advertisements
Question
Explain the following term/concept.
Limited Liability
Solution
(1) The term ‘liability’ means the state of being responsible for something, especially by law. The liability of a shareholder of a joint-stock company is limited to the extent of the face value of the shares held by him. It is limited up to the unpaid part of the face value of shares held by him; Shareholder is liable to pay only the unpaid amount on his shares. If the share amount is fully paid, then there is no further liability on the part of the shareholder.
(2) The company undertakes greater risks because the liability of the members is limited. In the event of liquidation of the company, the personal property of the shareholders cannot be attached by the creditors of the company in settlement of their debts. In such a case, the shareholders at the most may lose their investments in the shares of the company.
APPEARS IN
RELATED QUESTIONS
Short Answer Question
What is public company?
Short Answer Question
What do you mean by a listed company?
Explain the following term/concept.
Holding company
Explain the following term/concept.
Foreign company
Explain the following term/concept.
Associate company
Explain the following term/concept.
Perpetual Succession
Explain the following term/concept.
Government company
Study the following case/situation and express your opinion.
Sunset Printers Pvt. Ltd. was incorporated on 5th Dec, 2015 as per the provisions of Companies Act 2013. Mr. Manoj was the only subscriber to the Memorandum and Articles of Association and he was also the only member of the company.
a) Is this company a One Person company?
b) Will the liability of Mr. Manoj be limited or unlimited?
c) Will the company close down on the death, insanity or insolvency of Mr. Manoj?
Study the following case/situation and express your opinion.
On 1st Jan, 2018 Mr. John bought 100 shares of TIPS Paints Ltd. The face value of each share was Rs. 10. Mr. John paid the full amount of Rs. 1000. In Dec, 2018 the company suffered a loss of Rs. 10 crores.
a) Can the company ask Mr. John to pay any further money to the company?
b) Which feature of a Joint-stock company is referred to in this example?
c) Explain the feature briefly.
Distinguish between the following:
Sole Trading concern and Joint Hindu Family Business.
Choose the Correct Answer.
Companies established as a result of a charter granted by the King or Queen of a country is called _________
What are the different types of companies?
What is meant by Limited liability?
What is meant by Foreign Company?
What is meant by a Multi-National Company?
Authorised Capital is also known as ______.
Minimum number of members in a Private Company ______.
Minimum Capital of a Private Company.
