ICAEW ACA Certificate Level – Law Practice Test

When a company issues shares below their nominal value, the scenario is addressed in corporate law, specifically concerning the validity of the shares issued. The correct understanding in this case is that the company can demand payment of the difference between the nominal value and the price at which the shares were issued. This is significant because nominal value is the minimum price that shares can be legally issued for, and issuing them below this amount can create financial liability for the shareholders.

If shares are issued at a price lower than their nominal value, the company has the right to pursue the shareholders for payment of the gap between what was paid and the nominal value. This ensures that the company maintains its capital adequacy and complies with the relevant legislation designed to protect creditors.

The other potential outcomes, such as treating the shares as fully paid or invalidating them, do not hold true under these circumstances. The law specifically outlines how companies can deal with such issues, reflecting a structured approach to share capital and maintaining the integrity of the company's financial position.