GENERAL KNOWLEDGE

Detailed explanation-1: -In a private limited company, the liability of each member or shareholder is limited. Therefore, even in the case of loss under any circumstances, its shareholders aren’t liable to sell their own assets for payment. Likewise, the personal assets of the shareholders are not at risk.

Detailed explanation-2: -Shareholders are not liable for company debts because a company is a separate legal person from its directors and shareholders.

Detailed explanation-3: -The shareholder’s liability is limited to the shares they hold in the business – hence the ‘limited’ part of the business structure name.

Detailed explanation-4: -Shareholders in private and public limited companies and partners in limited liability partnerships benefit from something called ‘limited liability’. Limited liability is a legal status that limits a person’s financial liability to a fixed sum.

Detailed explanation-5: -A private limited company can be a small or large business. A private limited company has limited liability and often these types of business have ‘Ltd’ after the business name.