What is a Non-Assessable Stock
A non-assessable stock is a class of stock in which the issuing company is not allowed to impose levies on its shareholders for additional funds for further investment. The maximum liability the purchaser of the stock assumes is equal to the initial purchase price of the shares. Non-assessable stocks typically have the words "fully paid and non-assessable" printed on the stock certificate. Stocks issued by U.S. companies and traded on U.S. exchanges are generally non-assessable.
These are the opposite of assessable stocks, which are usually sold at a discount and do allow the issuer to gather additional funds for investment from investors after the initial purchase of the stock is made.
BREAKING DOWN Non-Assessable Stock
Assessable stocks proved unpopular, and most companies switched over to issuing non-assessable stock in the early 1900s. Assessable stocks were sold at a discount to the share price to entice buyers. Although equity was no longer sold at a discount compared to its share price, investors were more confident about buying non-assessable stocks because they no longer had to worry about the possibility that the issuer would force them to make more investments after the initial transaction. The largest investment the purchaser of a non-assessable stock has to make is the initial purchase price of the shares. The investor may lose the invested amount if the stock price goes to zero. However, the investor will never be required by the issuing company to make additional investments as a condition of their stock ownership.