Limited Liability

Limited liability (LL) is Liability that is limited to a Partner or Investor 's investment. Shareholder s in a Corporation or in a Limited Liability Company cannot lose more money than the value of their shares if the corporation runs into Debt , as they are not personally responsible for the corporation's obligations. The same is true for partners in a Limited Liability Partnership and the limited partners in a Limited Partnership . This is in contrast to Sole Proprietorship s and General Partnership s, in which the owner or partners are each liable for business debts ('''unlimited liability''' or UL).

Note that even though a shareholder's liability is limited in its capacity as a shareholder, the shareholder may still be directly liable for its own acts. For example, if the president (who happens to be a shareholder) of a small corporation negligently runs over someone while on company business, the president (as well as the company) is still liable for his own negligence; however, the other shareholders are not liable for the president's negligence, unlike a general partnership.

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Limited Liability by Michael S. Rozeff

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Limited Liability