Eli5: why the shareholders in a company are not liable to pay debts owed by the company?
In: 181
Shareholders don’t have any of the actual money, or assets of the company, they just own shares.
And unless they own a controlling share, or a significant amount of shares they have no power to make decisions about what the company does.
Basically, under normal circumstances a shareholder is just someone who buys a share of a company, and in reward, either receives a small portion of profits, or just has the ability to sell the share for a profit if it becomes more valuable.
Asking shareholders to pay debts would be sort of like asking employees to pay debts.
Now the real question is why are shareholders and banks paid out when a company goes bankrupt before customers are? Customers who haven’t received a product they purchased are far more deserving of getting their investment back than banks or shareholders who invested knowing there was risk.
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