RT Article
T1 An Appraisal of Shareholder Proportional Liability
JF Journal of business ethics
VO 32
IS 4
SP 329
OP 345
A1 Sollars, Gordon G.
LA English
PB Springer Science + Business Media B. V
YR 2001
UL https://www.ixtheo.de/Record/1785616250
AB Shareholders of corporations have their liability for actions of the corporation limited by law. Unlike the equity holder in a partnership or proprietorship, the assets that a shareholder has distinct from her holdings in the enterprise can not be taken to satisfy liabilities arising from actions of the enterprise itself. This paper argues that a reasonable principle of fairness argues for an alternative to limited liability, proportional liability. Proportional liability makes a shareholder liable for the same proportion of a corporation's excess of liabilities over assets that her number of shares bears to the total number of shares outstanding. The key idea is that it is unfair in situations in which explicit agreements can not be reached for shareholders to bear only limited risk when they may receive gains from stock dividends and appreciation that are not limited to any pre-determined amount. Proportional liability has not been much examined in the financial literature. Good utilitarian arguments have been given for limited liability over unlimited liability for corporate shareholders, but these arguments do not clearly support the choice of limited liability over proportional liability.
K1 unlimited liability
K1 theories of the corporation
K1 proportional liability
K1 Limited Liability
K1 corporations as moral persons
K1 corporate property rights
DO 10.1023/A:1010768824610