Assessable capital stock definition
/What is Assessable Capital Stock?
Assessable capital stock is shares in a financial institution that expose shareholders to an assessment above the amount they paid for the shares. This situation only arises when the institution is declared insolvent or enters bankruptcy proceedings. This type of stock is different from the normal situation, where shareholders can only lose the amount they invested in the shares they own. When shareholders cannot be assessed for more than what they paid for shares, the shares are known as non-assessable shares.
Assessable capital stock was issued primarily in the 1800s and partway into the next century, but has since been phased out.
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FAQs
Can a Corporation Enforce an Assessment on Stockholders?
A corporation can enforce an assessment on stockholders if the shares are legally designated as assessable and the corporation’s governing documents authorize such assessments. Shareholders may be legally obligated to pay additional funds when called upon, even after the initial purchase. Failure to pay an assessment can result in penalties, including forfeiture of shares or legal action.