CUET Preparation Today
What does the term "limited liability" mean in relation to a company? |
The company has limited assets and resources Members are only liable for debts up to their shareholding The company is limited in its business operations Liability of members extends to all company debts |
Members are only liable for debts up to their shareholding |
The correct answer is option 2- Members are only liable for debts up to their shareholding. "Limited liability" mean members are only liable for debts up to their shareholding. "Limited liability" refers to the concept that the liability of the members (shareholders) of a company is limited to the extent of the unpaid amount on their shares. The liability of the members of the company is limited to the extent of unpaid amount of the shares held by them. In the case of the companies limited by guarantee, the liability of its members is limited to the extent of the guarantee given by them in the event of the company being wound up. |
