Bankruptcy of joint-stock companies and its effects on shareholders and company managers

The Commercial Code recognizes joint-stock companies as merchants. Nowadays, these companies, as legal entities, play a significant and prominent role in economic and commercial transactions. The nature of business involves creating contracts, obligations, and debt payments. Therefore, when a merchant becomes incapable of meeting their debts and their assets are insufficient for this purpose, they are considered bankrupt, and specific regulations are applied to their activities. This situation has effects on other individuals and entities. In joint-stock companies, shareholders and managers are the two main pillars. Shareholders provide the company's capital, while managers are responsible for its administration. Therefore, the bankruptcy of a joint-stock company does not automatically lead to the bankruptcy of shareholders and managers. However, the opposite can also be true, and under certain circumstances or in specific bankruptcy situations, this general rule may be violated, leading to liability for the company's stakeholders. This article aims to explore this topic using library and internet sources and employing a descriptive-analytical approach. It delves into bankruptcy and its various types, as well as the mutual effects of a company's bankruptcy on shareholders and managers.