Limited liability
What Limited liability means in Business GCSE, as defined for AQA, Pearson Edexcel.
Definitions of Limited liability
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Reference: Pearson Edexcel
The business has a separate legal identity, so if it fails the owners only lose the money they invested in share capital and their personal possessions are protected.
Shareholders can lose only the money they invested, not their personal possessions, so personal assets are protected beyond the amount invested.
A feature of a private limited company that protects shareholders' personal assets, restricting their loss to their original investment.
Shareholders' personal assets are protected, although they can still lose the money they invested if the company fails.
The owners of a business can lose only the money they invested, not their personal assets, if the business fails.
Shareholders only risk the amount they invested, protecting their personal assets.
Topics that use Limited liability
- Business ownership (AQA GCSE)
- Business growth (Pearson Edexcel GCSE)
- The options for start-up and small businesses (Pearson Edexcel GCSE)
Related terms
- Partnership
- Private limited company (Ltd)
- Public limited company (plc)
- Unlimited liability
- Business growth
- Conflict and agreements
- Dividend
- Incorporated structures
Using Limited liability in the exam
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