Shareholder liability on receivership or liquidation

The limited liability structure of a company restricts the liability of a shareholder to the unpaid balance owing on the shares.

A shareholder can be called on at any time to pay this.  The board could call for payment or a receiver or a liquidator could do so.  If the shares are fully paid, there is no remaining liability for company debts unless the shareholder is bound contractually – under a guarantee to a lender to the company, for example.

For example, if a shareholder has paid $250 on 1,000 shares for which payment of $1,000 was earlier agreed upon, and the board, a receiver or a liquidator makes a call for the remaining $750, this will have to be paid to the company.  It is money owed to the company much the same as any other debt the company is entitled to collect and will then be applied to the company’s purposes.  When a liquidator makes a call for payment, the money will generally be used to repay the company’s creditors.