Question

The liability of the members of a company is limited to the extent of the _______ of the shares held by them.

• A. Nominal value
• B. Market value
• C. Exchange value
• D. Value as decided by SEBI

Answer 1

The correct option is A Nominal value

The liability of the members of the company is limited to contribution to the assets of the company upto the nominal value of shares held by him. A member is liable to pay only the uncalled money due on shares held by him when called upon to pay and nothing more, even if liabilities of the company far exceeds its assets. On the other hand, partners of a partnership firm have unlimited liability i.e. if the assets of the firm are not adequate to pay the liabilities of the firm, the creditors can force the partners to make good the deficit from their personal assets. This cannot be done in case of a company once the members have paid all their dues towards the shares held by them in the company.