Shareholder in a LTD company

newsmonkey

Probably a silly question, but I wondered if anyone could clear this up for me.

Mr X buys 50 shares in a company, paid up in full.
The company, months later, becomes insolvent and looks like it's about to go belly up.

If it does, would Mr X ..

(a) lose his original investment (£50)
(b) lose his original investment and be liable for £50 of the company's remaining debts, paid via the liquidator?

I understand shareholders' liability is limited to how much they buy in shares, just don't quite understand whether the original £50 invested is the only thing at risk.

Furthermore, what is the procedure for selling or surrendering shares in a company? Is it a simple matter of sending back the certificate?

AWOL_2

Mr X stands to loose only his original investment thus the original £50 and nothing more!

It is a limited company.

Do not count on getting any of the original money back as it will be swallowed up by liquidators, banks, tax man, creditors and after all that wont be a single penny left for Mr X.

Hope that helps

newsmonkey

Thanks for that clarification.

Let's say Mr X is also a creditor in the company. Would he automatically be contacted by liquidators (ie his details passed on by the company director to the liquidator), or would it be up to Mr X to confirm he was a creditor, and how much was owed to him?

bridiej

I've moved this into the Investment forum as you should get more replies in here!