There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below-

Assertion: The liability of a shareholder is limited up to the nominal value of the shares subscribed by one.
Reasoning: Paid up capital is the part of called up capital that actually has been paid by the subscriber to the company.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

The correct answer is option 2- Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Assertion: The liability of a shareholder is limited up to the nominal value of the shares subscribed by one. This is true. Limited by shares means that the liability of the shareholders to the creditors of the company is limited to the capital originally invested, i.e. the nominal and unpaid value of the shares . In case of loss, shareholders are not liable to pay more than the nominal value of shares. Hence, its said that the liability of the shareholders is limited to the unpaid calls or nominal value of the shares.

Reasoning: Paid up capital is the part of called up capital that actually has been paid by the subscriber to the company. This is true. Paid up capital is the part of called up capital that actually has been paid by the subscriber.

Both statements are true but reason does not explain why assertion is true. Both statements explain a different concept. Therefore, the correct answer is option 2.