Chapter 1, Problem 3P

Summary Introduction

Limited Liability Company (LLC):

A limited liability company (LLC), is similar to the partnership firm but here, members who run the company consist of general partners and limited partners.

The general partners have the same rights and duties but the limited partners enjoy the privilege of limited liability.

Corporation

A corporation is a separate legal entity which is separate from its owners. It is an artificial body and continues to exist even after the death of its owners where in such case the ownership is transferred. The owners are separate from the legal body and hence they are not liable for any obligation of the corporation individually. Similarly, the corporation is also not liable for any of the personal obligations of its owners.

Limited Liability

Limited liability is a concept where the shareholders (who are also considered as the owners of the company) are responsible for the debts of the company limited only to the value of the shares they own in that company.

To Identify:

Organizational forms that give their owners limited liability.