2 min read
Definition
Limited liability means a company is a separate legal person that owns its own debts. If it cannot pay, creditors pursue the company, not its directors or shareholders, whose loss is limited to their investment plus any unpaid share capital.
Where it can be lost
A personal guarantee sets limited liability aside for a specific debt, and wrongful trading or fraud can pierce it. Managed honestly and without guarantees, it holds. See limited liability explained.
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