"There is no obligation to pay for shares unless the company is wound up or goes into liquidation. However, as most shares are issued to raise capital, it is common to pay for them when they are issued. Payment must be made into the company’s own funds, depending on the payment method. This must be recorded in the company’s accounts. Payments can be in cash or non-cash.

If the company is wound up, each member is liable to pay the nominal value of the shares. If they have already been paid for [Q: are the shares I issue at the start considered "paid for"...], no further payments are due. Where they are unpaid at the time a company is wound up, the nominal value must be paid.

Alternatively, where company shares have been partly paid, directors may resolve to call on the shares for additional amounts to be paid."

Considering the above, I just want to make sure that, if in the formation of my company, I issue 10 million (700,000 shares being voting and 9,300,000 non-voting) shares, at the start, with an outstanding valuation of 300,000 GBP (without actually paying for them in cash - just somewhat of a grounded valuation), would they be considered "paid for" or would they be considered unpaid and would I then have to pay their nominal value at liquidation? Hoping it's not the latter, thanks!


1 Answer 1


They'd be considered unpaid, and if your company had creditors at liquidation then you would actually be called on to pay up to that amount to them. It's what "limited" liability means - it's not that shareholders have no liability to creditors at all, it's that their liability is limited to the amount of share capital.

By the time shares are publicly traded, the capital will invariably be paid up so there's no need to go back to shareholders in the event of liquidation/bankruptcy, but for private companies it's perfectly possible for it to remain unpaid.

In practice you can just reduce the nominal value of the shares enough to make the amount to be paid relatively trivial. It doesn't stop you later injecting more money on top of that in various ways.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .