Limited liability
The principle that shareholders or members are generally not personally responsible for a company’s debts beyond their agreed investment, unless a separate basis for liability exists.
Related terms
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Legal entity
A person or organisation recognised by law as having its own rights and obligations, such as a limited company.
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Corporate veil
The legal separation between a company and the individuals behind it. It usually protects directors and shareholders from company debts unless a separate basis for personal liability exists.
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Personal liability for company debt
A situation where a director, shareholder or other individual can be pursued personally for a company obligation because a separate legal basis for liability exists.
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