Question

A private limited company failed. It owed £60,000 in debt. Simon had

£10,000 invested in the company and he had personal assets worth
£100,000. How much could he lose because the company failed? Use
whole numbers only. No pound signs or commas.

Answer 1

£10,000

Step-by-step explanation:

Simon is a shareholder in a private limited company. As a shareholder, he enjoys limited liabilities to the debts of the company. Limited liabilities means that his obligations to the debts of the business are limited to the amount of capital invested. Should the company fail in meeting its obligations, Simon's liabilities to the company will be a maximum of $10,000, which is the amount he invested.

The limited liabilities feature protects shareholders and investors in private limited companies and corporations from losing more than their contributed capital in case a business fails. Simon's personal assets of $100,000 will not feature in any way.