Listed companies occasionally become insolvent and go out of business. If this happens, the assets will be sold off to pay creditors in a well-defined queue.
Ordinary shareholders come last in the queue, a long way behind secured creditors, and quite often get nothing back. Preference shareholders may be luckier.
On the bright side, the principle of limited liability means that shareholders cannot lose more than the value of their shareholdings. Despite being the owners of the business, they cannot be held liable for the company's debts.
Recommend ReadingBook offers!
|
|
Value at Risk and Bank Capital Management
Francesco Saita |
| Our price: £37.59
Normally: £46.99 |
|
|
The Origin of Financial Crises
George Cooper |
| Our price: £11.72
Normally: £16.99 |
|
|
The Little Book That Builds Wealth
Pat Dorsey |
| Our price: £9.59
Normally: £11.99 |
