Can a shareholder be liable in case of bankruptcy of one of the companies he invested in?
"No. One of the key ideas behind a corporation is that an investor's liability is limited to the amount he invests, i.e. the amount of stock he buys. This is the primary reason why small businesses become corporations, even though one person owns 100% of the stock. Then if the business goes broke, he won't lose his house, retiretment fund, etc. He'll lose everything he had in the business, but at least there's a limit to it. (In some countries there are other ways to achieve the same results, like creating a ""limited liabililty company"", but that's another story.)" "No, assuming by ""public company"" you mean a corporation.  The shareholder's individual liability is limited to their investment.  Your shares can go to zero value, but that's the limit. EDIT In regard to the follow-up question in the comments: ""Are all companies in the stock market corporations?"" the answer is definitely ""no.""  I cannot say much about other countries, but the US markets have some entities which are known as ""master limited partnerships.""  These trade shares on the market by the usual rules, but if you buy you become a partner in the company rather than a shareholder.  You still have limited liability in this case, but there will be differences, for example, in how you're are taxed." The answer depends on whether the company involved has 'limited liability'. Most, but not all public and listed companies and corporations have this, but not all so it is worth checking and understanding what you are getting involved with.   The expression 'limited liability' means that the owners (shareholders) of a company have a liability up to the amount of the face value of the shares they hold which they have not yet paid for. The difference is usually minor but basically it means that if you buy $10 of shares you have no liability, but if the company gives you $10 of shares, and you pay them (in cash or kind) $5, then you still have a liability of $5. If the company fails, the debtors can come after you for that liability.  An 'unlimited liability' company is a different animal altogether. Lloyds insurance is probably the most famous example. Lloyds worked by putting together consortiums to underwrite risk. If the risk doesn't happen, the consortium keeps the premiums, if it does, they cover the loss. Most of the time they are very profitable but not always. For example, the consortiums which covered asbestos caused the bankruptcies of a great many very wealthy people. "Not normally, for a limited liability company anyway. In extreme circumstances a court may ""lift the veil"" of incorporation and treat shareholders as if they were partners. If you are an office bearer or a director that is found to have breached duties/responsibiities then that is another matter. Dim views can be taken of shonky arrangents for companies formed for activites not of a bona fide business nature too." "I am a tax lawyer and ALL the RESPONSES ABOVE are 1/2 Correct but also 1/2 Wrong and in tax law this means 100% WRONG (BECAUSE ANY PART INCORRECT UNDER TAX LAW will get YOU A HUGE PENALY and/or PRISON TIME by way of the IRS!  So in ESSENCE ALL the above answers are WRONG! Let me enlighten you to the correct answer in 5 parts, as people that do not practice tax law may understand (but you still probably will not understand, if you are NOT a Lawyer). 1) All public companies are corporations (shown by Ltd.), 2) only Shareholders of Public companies (ie, traded on the NYSE stock market) are never liable for debts of a bankrupt company, due to the concept of limited liability. 2) now Banks may ask a sole proprietorship (who wants to incorp. for example) to give collateral, such as owners stocks/bonds or his/her house, but then of course the loanee can tell the Bank No Thanks and find a lender that may charge higher interest rates but lend money to his company with little to NO collateral. 3) Of course not all companies are publicly traded and these are called private companies. 4)""limited liability"" has nothing to do directly with subsequent shareholders (the above answer is inaccurate!), it RELATES rather to INITIAL OWNERS INVESTMENT in their company, limiting the amount of owner loss if the company goes bankrupt. 5) Share Face-value is usually never related to this as shares are sold at market value in real life instances (above or below face-value), or the most money Investments Banks or owners can fetch for the shares they sell (not what the stock's face-value is set at upon issuance). Never forget, stocks are sold in our Capitalistic System to whomever pays the most, as it is that Buyer who gets to purchase the stock!" In an open corporation scenario a stock holder may well be found liable. It's a very narrow and uncommon bunch of scenarios but it's well worth sharing. See the paragraph on open corporations in the following document: http://nationalparalegal.edu/public_documents/courseware_asp_files/businessLaw/RightsOfShareholders/LiabilityOfShareholders.asp
The reason for such differences is that there's no source to get this information. The companies do not (and cannot) report who are their shareholders except for large shareholders and stakes of interest. These, in the case of GoPro, were identified during the IPO (you can look the filings up on EDGAR). You can get information from this or that publicly traded mutual fund about their larger holdings from their reports, but private investors don't provide even that. Institutional (public) investors buy and sell shares all the time and only report large investments. So there's no reliable way to get a snapshot picture you're looking for. "You own a fractional share of the company, maybe you should care enough to at least read the proxy statements which explain the pro and con position for each of the issues you are voting on. That doesn't seem like too much to ask. On the other hand, if you are saying that the people who get paid to be knowledgeable about that stuff should just go make the decisions without troubling you with the details, then choose the option to go with their recommendations, which are always clearly indicated on the voting form. However, if you do this, it might make sense to at least do some investigation of who you are voting onto that board. I guess, as mpenrow said, you could just abstain, but I'm not sure how that is any different than just trashing the form. As for the idea that proxy votes are tainted somehow, the one missing piece of that conspiracy is what those people have to gain. Are you implying that your broker who has an interest in you making money off your investments and liking them would fraudulently cast proxy votes for you in a way that would harm the company and your return? Why exactly would they do this? I find your stance on the whole thing a bit confusing though. You seem to have some strong opinions on corporate Governance, but at the same time aren't willing to invest any effort in the one place you have any control over the situation. I'm just sayin.... Update Per the following information from the SEC Website, it looks like the meaning of a proxy vote can vary depending on the mechanics of the specific issue you are voting on. My emphasis added. What do ""for,"" ""against,"" ""abstain""and ""withhold"" mean on the proxy card or voter instruction form?   Depending on what you are voting on,   the proxy card or voting instruction   form gives you a choice of voting   ""for,"" ""against,"" or ""abstain,"" or   ""for"" or ""withhold."" Here is an   explanation of the differences: Election of directors: Generally,   company bylaws or other corporate   documents establish how directors are   elected. There are two main types of   ways to elect directors: plurality   vote and majority vote. A ""plurality vote"" means that the   winning candidate only needs to get   more votes than a competing candidate.   If a director runs unopposed, he or   she only needs one vote to be elected,   so an ""against"" vote is meaningless.   Because of this, shareholders have the   option to express dissatisfaction with   a candidate by indicating that they   wish to ""withhold"" authority to vote   their shares in favor of the   candidate. A substantial number of   ""withhold"" votes will not prevent a   candidate from getting elected, but it   can sometimes influence future   decisions by the board of directors   concerning director nominees. A ""majority vote"" means that directors   are elected only if they receive a   majority of the shares voting or   present at the meeting. In this case,   you have the choice of voting ""for""   each nominee, ""against"" each nominee,   or you can ""abstain"" from voting your   shares. An ""abstain"" vote may or may   not affect a director's election. Each   company must disclose how ""abstain"" or   ""withhold"" votes affect an election in   its proxy statement. This information   is often found toward the beginning of   the proxy statement under a heading   such as ""Votes Required to Adopt a   Proposal"" or ""How Your Votes Are   Counted."" Proposals other than an election of   directors: Matters other than voting   on the election of directors, like   voting on shareholder proposals, are   typically approved by a vote of a   majority of the shares voting or   present at the meeting. In this   situation, you are usually given the   choice to vote your shares ""for"" or   ""against"" a proposal, or to ""abstain""   from voting on it. Again, the effect   of an ""abstain"" vote may depend on the   specific voting rule that applies. The   company's proxy statement should again   disclose the effect of an abstain   vote." Wrong message. I initially thought this was true, but it's not as cut and dry as people want to make it seem like it is. People usually try to say that he's just a bad CEO for Sears, and while this is completely true, the long game isn't as cut and dry.   By buying a majority of Sears, he's using his power to authorize the sale of properties to himself, which he's then re-leasing back out when Sears fails to pay him (as Sears' landlord). Lampert isn't looking to fix the house -- he's looking to put the homeowner out of business, buy it, re-lease it to the homeowner, hike up the rates, then when the homeowner can't pay, re-lease it back out to someone else.   It's very tangled and that's exactly why shareholders are going to lose big time when Sears declares Chapter 7 bankruptcy. "When they entered Bankruptcy they changed their stock symbol from AAMR to AAMRQ. The Q tells investors that the company i in Bankruptcy. This i what the SEC says about the Q: ""Q"" Added To Stock Ticker Symbol When a company is involved in bankruptcy proceedings, the letter ""Q""   is added to the end of the company's stock ticker symbol. In most   cases, when a company emerges from bankruptcy, the reorganization plan   will cancel the existing equity stock and the old shares will be   worthless. Given that risk, before purchasing stock in a bankrupt   company, investors should read the company's proposed plan of   reorganization. For more information about the impact of bankruptcy   proceedings on securities, please read our online publication,   Corporate Bankruptcy. The risks are they never recover, or that the old shares have nothing to do with new company. Many investors don't understand this. Recently some uninformed investors(?) tried to get a jump on the Twitter IPO by purchasing share of what they thought was Twitter but was instead the bankrupt company Tweeter Home Entertainment. Shares of Tweeter Home Entertainment, a Boston-based consumer   electronics chain that filed for bankruptcy in 2007, soared Friday in   a case of mistaken identity on Wall Street. Apparently, some investors confused Tweeter, which trades under the   symbol TWTRQ, with Twitter and piled into the penny stock. Tweeter, which trades over the counter, opened at 2 cents a share and   jumped as much as 15 cents — or 1,800 percent — before regulators   halted trading. Almost 15 million shares had changed hands at that point, while the   average daily volume is closer to 150,000. Sometimes it does happen that the new company does give some value to the old investors, but more often then not the old investors are completely wiped out." Limiting liability to your investment is one of the main points of corporations. When you contract with a corporation you know that all you can get if the corporation defaults is the assets owned by the corporation, not the owners of said corp. There are plenty of covenants debtholders can put in place to restrain management from making decisions that can be detrimental to said debtholders.    &gt;So here is a case of a legitimate lawsuit, it was heard in court and Rich Dad was ordered to pay $24 Million to his former partner(s).  It seems that the corporation was ordered to pay, no? The man does not claim he can't pay it, he claims the corporate entity that is supposed to pay it can't pay it. I don't think the opposing side ever had an agreement with Kiyosaki on a personal level.  This man probably runs several businesses, there is a chance some may go under. It is a legitimate tactic to insulate each business from one another. The debtholders know this ahead of time and receive extra yield on their investment for taking these easily identifiable risks. If you don't want to invest with someone who doesn't have skin in the game, all you have to do is don't invest. Doesnt mean that equity or even debt holders wouldn't lose their investment.  Those money and banking texts are presently useless post GFC given the incredible moral hazard and how all of the traditional bankruptcy rules were ignored. &gt; an investor is more valuable to a company than an employee is.  It IS possible to run a company without investors. Now try it without workers.  &gt; Furthermore, an investor takes on risk, something an employee does not do. When I purchase CAT stock, I may very well lose everything. I am the last in the long line of creditors. However, the employee does not stand to lose anything...  Incorrect. When you invest in CAT stock you stand to lose everything *that you invested*. If you invested more than you can afford, then that's your own stupidity.  An employee risks their entire livelihood - including all income, healthcare, pensions, etc - on the hope that the company will succeed...and they have less choice about the employment (especially in these days of 'take whatever job you can get') and much less access to the financial statements and company facts that an investor would get. The creditors will not be able to go after his father's estate (assuming the father had nothing to do with the business), but at some point, the estate will be divided up. At that point, any money or assets that your husband inherits will be fair game, as they are now your husband's money or assets. I want to be clear; it's nothing to do with your husband being executor (or co-executor) of the estate. This does not contradict zeta-band's earlier answer; Zeta-band is talking about the estate before it is divided up, I'm just pointing out that there may be issues after it is divided up.