The limits of liability are not to hold shareholders (who have no control over the actions of the company) liable for acts of company employees — other than for what they invested in the company. Limited liability means that only the assets of the corporation are held up as “collateral” for its liabilities.

It would be ludicrous to hold all the savings of an 80-year grandmother who invested $100 in a poorly run corporation–which would be the case if she were in a partnership. Limited liability means that only that $100 of the grandmother is liable, and all her other assets not invested in that corporation – as a shareholder — are not held liable. 

Limited liability means that the shareholders are not responsible for the decisions that they do not make — only corporate officers, managers, and employees are liable to the extent that they make them.

Share This

Share this post with your friends!