Limited liability

The restriction of an investor's potential losses to the amount invested. Without the privilege of limitation, investors would have unlimited liability for a company's debts.

The option of limited liability is one of the important advantages of incorporation.

Less commonly in the commercial context, but often used for social or public interest bodies, a company member's liability may alternatively be limited to an amount guaranteed by the member.

See also

• Company
• Guarantee
• Joint and several liability
• Legal personality
• Limited company