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In a company limited by shares under the Companies Act, 2013, what is the ordinary limit of a member’s…

Sections 2(22) and 4(1)(d)(i) limit a member’s liability to the amount, if any, unpaid on the shares held. Amounts the member has already paid reduce the outstanding exposure.

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In a company limited by shares under the Companies Act, 2013, what is the ordinary limit of a member’s liability as a shareholder?

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Answer and explanation

Correct answer A

Sections 2(22) and 4(1)(d)(i) limit a member’s liability to the amount, if any, unpaid on the shares held.

Amounts the member has already paid reduce the outstanding exposure.

Option feedback

Option A

The unpaid portion of the shares fixes the member’s liability in that capacity.

Option B

A member with fully paid shares has no unpaid share amount.

Option C

Company debts do not set the member’s ordinary share liability.

Option D

The cap concerns the subscription amount unpaid, irrespective of the trading price.

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