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I am a minority shareholder in a company. A few years ago the company took out a loan and all the shareholders were practically forced to sign personal suretyships with the bank. I wasn’t happy with this because my share of the company is so small. Lately the company has gone through a dip in sales, and landed up missing a couple of payments to the bank. I’ve just received a summons from the bank to pay them the money. But they’re claiming the full amount. Surely I should only be liable for 5% of the loan, because I only own 5% of the company? 

Technically, you should only be liable for 5% of the loan – but this is only between the sureties, ie. it doesn’t affect the bank. If you signed a suretyship agreeing to be “jointly and severally” liable, this means that you are liable to the bank for the full amount of the loan, irrespective of your shareholding. Likewise, the other sureties will also be liable to the bank for the full amount of the loan. Once the sureties have collectively repaid the loan and all interest charges and costs, the bank will deem the loan to be settled. And it will be up to the sureties to reconcile the payments according to equity holding.

If you pay more than your share of 5%, you can claim the excess from your fellow shareholders.

However, this all depends on the nature and terms of your suretyship, and this answer could be very different if you signed a limited suretyship as opposed to an unlimited suretyship. Thus our advice to you is to contact an attorney who will be able to read the suretyship and advise you on the best course of action.