Why Limited Liability Might Not Be As Limited As You Think

Pelle Braendgaard:

One misunderstanding many people have is about limited liability. To understand Limited Liability you first must understand that it was originally introduced to protect the investors and not necessarily the managers of a company.

This basically means that as a stock holder in Microsoft you wont receive a demand for payment of whatever their legal judgments make them pay each month. You can only loose the money you paid for their shares in the first place. Now a large company with thousands of investors is very different from your average one or two man company. First of all you are likely to be the only shareholder(s) as well as officer(s) in the company.

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