Question

What happens to shareholders when a company is liquidated?

Answer 1

In that event, the company's shareholdersmay be entitled to a portion of the liquidatedassets, depending on which shares they hold and how much liquid assets are left over. However, the stock itself will become worthless, leaving shareholders unable to sell their defunct shares.

Answer 2

First, if there is any amount (capital of the shareholders) after settling outside creditors and debenture holders, it will be distributed among the PREFERENCE SHARE HOLDERS.

Even after that, if any amount is left, it will be distributed among the EQUITY SHARE HOLDERS.