This question requires an explanation of the rules relating to shareholders’ liability for shares.

(a) 
2 marks Good analysis and explanation of the nature of Ho’s potential liability.
1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 
2 marks A good explanation of the share premium account and what it can be used for.
1 mark Some, but limited, explanation.
0 marks No knowledge or explanation.

(c) 
2 marks A good explanation of Ho’s inability to access the share premium account.
1 mark Some, but limited, explanation.
0 marks No knowledge or explanation.