More details to this question:
I am a founder owner of a private corporation with 30% share holding along with three other partners 30%, 10%, 10% . Remaining 20% is reserved for employees. I am the COO and the other 30% owner is the CEO. The company is growing rapidly but I am not happy with the money laundering of the CEO. There is a lot of money from banks borrowed, just because it is available. I want to retire but since there will be no way to cash out my 30% , I have to just hang on to it. Now, am I liable for all the loans the company is borrowing once I retire, because I am a majority share holder? If the company goes on to bankruptcy what kind of liability is on me. Because most of the bank credits are available to us is also based on individual credits.
1 ANSWER
With very few exceptions, shareholders are not liable for their corproation's obligations. That is the most important reason to incorporate. Thus, if the corporation was run properly (e.g. no commingling of funds, observation of corporate formalities, etc.), you would, in almost all instances, not be liable for any of the corporation's debts unless you had personally guaranteed them. If that is what you meant when you wrote that most of the bank credits are based on individual credits, then you would be liable on your guaranty, but that has nothind to do with your status as shareholder, just your contractual obligation as guarantor. You should look at the provisions of any guaranty to make sure that it is not continuing for new debts, and if it is to cancel it going forward, if you can.
Answered on Aug 13th, 2018 at 11:45 AM