Shareholder liability refers to the situation in which you, as a shareholder, are liable in certain cases for the actions and debts of the company in which you own shares.

This can come up, for example, when a new owner, after selling the business, takes illegal actions, such as failing to remit taxes that were already factored into the purchase price.

In cases of fraud or mismanagement, shareholders may be held responsible, especially when the protection of creditors' rights is at stake.

This concept is similar to directors' liability, but focuses specifically on shareholder responsibility.