Legal Personality Flashcards
What is meant by limited liability?
Shareholders are not liable to pay debts which the company owes to its creditors because it is the obligation of the company (usually through a contract) to pay its creditors
Where might shareholders be liable to lose money?
If their company becomes insolvent, shareholders will be liable to lose the money that they have invested in subscribing for the company’s shares.
Also liable to make payment for any shares they have not fully paid for, but that is the extent of their liability.
Which section of the Insolvency Act enshrines limited liability?
s74 IA 1986
What is the concept of limited liability fundamental to?
Passive investment
Why many entrepreneurs use limited liability companies
Why groups of companies have developed
