limited liability

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Limited liability

Limitation of loss to what has already been invested.

Limited Liability

A situation in which a partner is not liable for more than his/her/its investment in case of insolvency. That is, limited liability means that the relevant partner would lose the value of his/her investment if the company declares bankruptcy, but would not be held liable for other outstanding debts. A limited liability company, where all partners and owners have limited liability, is one of the most common corporate structures in the United States. It is designated by the letters "LLC" after its name.

limited liability

The liability of a firm's owners for no more capital than they have invested in the business. Essentially, the legal separation of ownership and liability means that a stockholder can lose no more than he or she has paid for the shares of ownership regardless of the firm's financial obligations. Limited liability is one of the major advantages of organizing a business as a corporation. Compare unlimited liability.

limited liability

an arrangement that limits the maximum LOSS which a sHAREHOLDER is liable for in the event of company failure to the SHARE CAPITAL which he originally subscribed.

The principle of limited liability limits a shareholder's maximum loss in the event of his company failing to the original share capital which he invested, no further claims by creditors against the shareholder's other assets being permitted. Once shareholders were protected in this way many more people were encouraged to invest in companies and JOINT-STOCK COMPANIES grew rapidly. To warn potential creditors that any claims by creditors will be limited in total to the amount of the company's share capital, such companies carry the term: ‘Limited’ (Ltd) or ‘Public Limited Company’ (Plc) after their names.

When a business is subject to unlimited liability, as is the case with SOLE PROPRIETORS and unlimited PARTNERSHIPS, the owners of the business are liable in full for the debts of the business if it fails. This may involve their losing not only the capital that they have put into the business, but also most of their personal assets.

When the directors of a joint-stock company continue trading after they should have known the company was insolvent (see INSOLVENCY), they can lose the protection of limited liability and become personally responsible for the firm's debts.

limited liability

a liability that limits the maximum LOSS that a SHAREHOLDER is liable for in the event of company failure to the SHARE CAPITAL that he or she originally subscribed.

The principle of limited liability limits a shareholder's maximum loss in the event of a company failing to the original share capital that he or she invested, no further claims by creditors against the shareholder's other assets being permitted. In protecting shareholders in this way, many more people were encouraged to invest in companies, and JOINT-STOCK COMPANIES grew rapidly To warn potential creditors that any claims by creditors will be limited in total to the amount of the company's share capital, such companies carry the term ‘Limited’ (Ltd) or ‘Public Limited Company’ (plc) after their names.

When a business is subject to unlimited liability, as is the case with sole proprietors, unlimited partnerships and unlimited companies, then the owners of the business are liable in full for the debts of the business if it fails. This may involve them losing not only the capital that they have put into the business but also most of their personal assets.

References in periodicals archive ?
The limit of liability for this Coverage will be the limit of liability stated for this particular endorsement number in the Declarations, subject to the following limitations:...
(165) In Beshears, the insurer, Shelter, claimed it was entitled to an offset "to reduce its limit of liability by the $100,000 recovered from the tortfeasor's insurer." (166) John Beshears was injured and his wife, Sue Ellen Beshears, died when the car John was driving was hit by a car driven by the tortfeasor.
(18) The court held that the foregoing, when read in conjunction with a "loss sustained during prior insurance" clause similar to the one in the Superstition Crushing matter, restricted the insured's recovery to one limit of liability.
As far as can be discerned, the exact same policy form at issue in Superstition Crushing was determined by this Pennsylvania state court to be unambiguous and provide but one limit of liability.
In contrast, the MTC 1980 and the new rules express a principle that the aggregate compensation payable shall not exceed the limit of liability for the total loss of the cargo.(25) However, close reading of these provisions reveals a significant difference in their application.
The court held that the insurer clearly expressed its intent to include defense costs within the policy's limit of liability.
Preservation of the Side A limit, providing a reinstated limit of liability for any Side A losses should an unrelated claim lead to erosion of the original limit of liability, whether it occurs on the Side A, B or C element of the policy.
Policies can be written for a $100,000 limit of liability up to $10 million.
As part fulfillment of the objectives of the foundation STASY out competition to award three (3) Insurance Contracts Liability with a minimum limit of liability Insurer regarding malfunction and / or damage to third parties for any loss event and throughout the period of insurance the amount of a 50 000 000,00 EUR to STASY AU / AMEL accordance with Annex IV : b 5 000 000,00 EUR to STASY AU / TRAM, in accordance with Annex V : c 10 000 000,00 EUR to STASY AU / ISAP accordance with Annex VI
"We recognize that many midsized private companies have significant exposures and are sophisticated enough to understand that they need more than one limit of liability to respond to the wide array of suits against them," Salter said.
IronHealth s HPL policies now provide that all drop-down coverages will be available throughout the policy period with a preset limit of liability coverage per event, which is subject to an overall aggregate limit of liability under the terms of the policy.
Enhancements to the coverage include defense costs outside the limit of liability and coverage of the activities of both life insurance agents and registered representatives of sponsors' subsidiary broker/dealers.