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 ?
Limited liability has been called "a distinguishing feature of corporate law--perhaps the distinguishing feature" of corporate law.
Before the application for registration of the private limited liability company is submitted to the Administrator of the Register, a civil law notary must verify the correctness of the particulars entered into the application, the compliance of the statutes with the statutory requirements and the fact that the private limited liability company is eligible for registration.
The limited liability company has a storied history traced in part
Are the Courts Developing a Unique Theory of Limited Liability Companies or Simply Borrowing from Other Forms?
Like LLCs, these are disregarded for tax purposes, but afford limited liability under local law.
The IRS could conclude that the excess value was transferred to the corporation's shareholders who then contributed it to the limited liability company.
Now members could finally be assured of favorable tax treatment to accompany the desired limited liability.
For an entity to be classified as a partnership for federal income tax purposes, it must lack two of the four corporate characteristics: limited liability, centralized management, free transferability of interests, and continuity of life(8).
The LLC enjoys the limited liability of a corporation for all shareholders, and all partners benefit from the flow-through tax treatment of a partnership.
5, the office started accepting online filings of biennial reports of limited liability companies and annual reports of limited liability partnerships.
The Senate Standing Committee on Finance, Revenue, Economic Affairs, Statistics and Privatization has approved the Limited Liability Partnership Bill, 2017.
Richard, director of the National Retail Group in Manhattan, represented the seller, a limited liability company.

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