Multiple choice

Limited liability means ________?

  1. the shares in the company is strictly limited

  2. the shareholder is only liable for the debts of the company to the extent of unpaid value of his shares

  3. all the shareholders have the same liability

  4. shareholders is liable for debts of the company limited to the profits
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Limited liability means shareholders are only responsible for the company's debts up to the unpaid value of their shares. Their personal assets beyond this investment are protected. This is a key feature of corporations that encourages investment.

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