Why A Company Called Limited
In the UK and Australia (and some other countries), the company has "Limited" after it. Frequently asked the question is why is this. This article will explore why this is the case.
The company is a unique entity. For the purpose of law, the company has its own legal personality. This means that the company can own property, enter into contracts, sue and be sued. A company is different from the shareholders who own the shares. It is a company that owns all its assets, not shareholders
Similarly, a company can also have liabilities. It can owe the people and other companies. If this is the case, it is again the company owning the money, not its shareholders
That is why companies have limited names after their names. It is the abbreviation of "limited liability". This means that the company is responsible for its debts and obligations, not its shareholders. If you lend money to a company, then it is the company, not pay your shareholders.
Persons with limited liability are shareholders of the Company. To become a shareholder, you need to buy shares from the company. This is your investment in the company, as a return on the equity, you will get your shares. The money you invest in a company is the maximum amount you can lose if the company goes bankrupt.
That's why your responsibility is limited