Limited liability means that

Assessment: WAEC SSCE - Economics - 1994 (Objective) Subject: Economics

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Limited liability means that
Answer Details
Limited liability means that the debt of a company can only be paid from its own assets. This means that the owners of the company (shareholders) are only responsible for the amount of money they have invested in the company and not for any additional debt the company may have. If the company goes bankrupt, the shareholders will not lose any more money than the value of their investment. This feature of limited liability is an important advantage of forming a company, as it reduces the financial risk for investors and encourages entrepreneurship.
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