If I have stock in a compnay and they go under what does that mean for me?

Question

Basically since I would be a shareholder, does that mean that I could be liable for any expenses that need to be paid? or will I just lose the money I invested? Does anyone know where I can find out good basics to investing? I understand how stocks work but I don't really understand the whole process of making money and such.

Answer 1

You would lose everything you had invested in the stock.  But normally you would not be personally liable for any expenses of the company.  The only way that could possibly happen is if you bought the stock below par.  Then you could be liable for the difference between what you bought it for and the par value.  This creates an exception to the protection a corporation provides shareholders from liability.    But its pretty much a moot point anymore. This doesnt happen much anymore because par value is set at an extremely low rate like one cent.

Answer 2

Just your investment money will be lost.  

Plenty of websites to get stock info...try Motley Fool as example

Answer 3

If you're only a shareholder you cannot be held personally liable for the debts of the company you invested in. You can lose your entire investment however.

Answer 4

That my friend was the whole idea behind creating a corporation--to prevent the shareholders from being saddled with the debts owed by the corporation so you are off scott free.  All you loose is most likely everything you paid for your stock.  

It is just too bad that congress does not pass a law that provides that the top executives of the company have to pay back everything they ever earned from the company for running it into the ground.  Instead they get to keep their hundreds of millions and everyone else looses.

Answer 5

for the second part of your question which was not answered by any of the above responders:

books:

"The Stock Market for Dummies" or "Investing for Dummies" both by Eric Tyson.

web:

financial-realities101.com

investing.rutgers.edu/index.htm

suite101.com/course.cfm/16607/

buyandhold.com

stocks.about.com/od/understandingstock...

blogger.uncleleosden.com/2007/05/inves...

.html

Answer 6

That is part of the purpose of a corporation.

A corporation is it's own entity, separate to the investors and that isolates the investors from the liability of the corporation.

You don't have any risk more than the money you invested.