what is limited liability? why does the goverment grant limited liability to the owners of corporations?...

what is limited liability? why does the goverment grant limited liability to the owners of corporations? Why is limited liability more important for firms trying to raise funds from a large mumber of investors than for firms trying to raise funds from a small number of investors?

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Expert Solution

Limited liability ensures that:-Shareholders of a business will not lose more than their interest in the company. The government gives corporate owners limited liability:-to reduce the risk of shareholders and thereby promote corporate investment.

Limited Liability becomes more important to companies seeking to collect capital from a large num of investors rather than a tiny num of investors so investors who make a small investment in the company may be unable to lose all their personal assets if the firm fails.

Rahul Sunny answered 1 year ago

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