Limited liability company and Negative externality: Difference between pages

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In a limited liability company the liability of the members is restricted to a predefined amount.
A negative externality is a cost or other disadvantage suffered by a participant in the economy, caused by the actions or failures of another, with which it had no contractual relationship.


In the case of a company ''limited by shares'' the members' liability is restricted to the amount, if any, unpaid on the shares they hold.  
Examples include various kinds of environmental pollution.


Almost all commercial companies are of this type.


 
==See also==
In a company ''limited by guarantee'' the liability of the members is restricted to a predefined amount which the members guarantee to contribute (on the event of any winding up of the company).
*[[Contagion]]
 
*[[Externality]]
 
*[[Moral hazard]]
Often abbreviated to 'limited company'.
*[[Systemic risk]]
 
 
The purpose is to encourage enterprise by reducing the risk of personal bankruptcy.
 
Balancing the benefits of limited liability for the members, the company itself must prepare and file financial and other information at the companies registry, to enable creditors and others to access data relevant to the creditworthiness of the organisation.
 
 
== See also ==
* [[Bankruptcy]]
* [[Companies registry]]
* [[Creditors]]
* [[Creditworthiness]]
* [[Guarantee]]
* [[Limited liability]]
* [[Limited liability partnership]]
* [[Member]]
* [[Public limited company]]
* [[Share]]
* [[Unlimited company]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Latest revision as of 19:00, 5 January 2021

A negative externality is a cost or other disadvantage suffered by a participant in the economy, caused by the actions or failures of another, with which it had no contractual relationship.

Examples include various kinds of environmental pollution.


See also

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