Re: Limited Liability
In what way?
You pitch your great business idea to Mrs Investor, she agrees and wants to invest in your business.
She buys a 20% stake, and you agree to give her 20% of the post-tax profit. You keep the 80% for yourself.
You then screw up royally and the business goes bust, owing far more than its assets.
Without limited liability:
You go bankrupt, the creditors take everything you have.
She's also jointly and severally liable for your fuck up, and also goes bankrupt.
- If you run away, the creditors go after her instead.
So your screwup not only killed the business, it bankrupted you and everyone who believed in you - perhaps including all your employees if they had shares too.
Is she likely to let you run the business, or is she going to want to micro-manage absolutely everything you do?
With limited liability, the shareholders are only liable for the book value of their shares. If they already gave the business the money then they've already paid.
Thus if you screw up, you don't (necessarily) also go bankrupt. You personally only owe the 80% company share value, and your shareholders have already discharged their obligations.
They are still able - and may even be willing - to help you try again.