David has decided to incorporate his Mexican Restaurant business which he has run previously as sole trader. After careful consideration with you, he has set up a limited liability company called Mexican Cantina Ltd in which he is the sole shareholder with 10,000 fully paid-up shares at $1 per share. He is also joint director of Mexican Cantina Ltd with his wife Claire.

Required:

1. What is the maximum liability which Julian is personally liable as a shareholder of Mexican Cantina Ltd? (2 marks)
2. Explain the legal principle which limits the personal liability of Julian as a shareholder of Mexican Cantina Ltd. Which legal case established this legal principle? (5 marks)