Limited liability

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Legal status where a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership.

- Limited liability

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Legal liability

In law, liable means "responsible or answerable in law; legally obligated".

Iustitia ("Lady Justice") is a symbolic personification of the coercive power of a tribunal: a sword representing state authority, scales representing an objective standard and a blindfold indicating that justice should be impartial.

In commercial law, limited liability is a method of protection included in some business formations that shields its owners from certain types of liability and that amount a given owner will be liable for.

Joint-stock company

Business entity in which shares of the company's stock can be bought and sold by shareholders.

The transfer letter from 1288 through which Bishop Peter of Västerås reacquires an eighth of Tiskasjöberg, Kopparberget. The original can be found at Riksarkivet (National Archive) in Stockholm.
Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC). Founded in 1602, the VOC was a pioneering early model of joint-stock companies at the dawn of modern capitalism. The VOC is often considered by many to be the world's first permanently organized limited-liability joint-stock company, with a permanent capital base. In other words, the VOC was the first recorded joint-stock company to get a fixed capital stock.
One of the oldest known stock certificates, issued by the VOC chamber of Enkhuizen, dated 9 Sep 1606.
Courtyard of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first formal stock exchange. The VOC's 17th-century business model played a crucial role in the evolution of modern-day joint-stock corporations, especially publicly traded companies.
The flag of the East India Company, which is speculated to have influenced the design of the Grand Union Flag.

In modern-day corporate law, the existence of a joint-stock company is often synonymous with incorporation (possession of legal personality separate from shareholders) and limited liability (shareholders are liable for the company's debts only to the value of the money they have invested in the company).

Corporate law

Body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses.

Hogarthian image of the South Sea Bubble, by Edward Matthew Ward, Tate Gallery
"Jack and the Giant Joint-Stock", a cartoon in Town Talk (1858) satirizing the 'monster' joint-stock economy that came into being after the Joint Stock Companies Act 1844.
A bond issued by the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400 florins
Adolf Berle in The Modern Corporation and Private Property argued that the separation of control of companies from the investors who were meant to own them endangered the American economy and led to a mal-distribution of wealth.

Under corporate law, corporations of all sizes have separate legal personality, with limited or unlimited liability for its shareholders.

Corporation

Organization—usually a group of people or a company—authorized by the state to act as a single entity and recognized as such in law for certain purposes.

McDonald's Corporation is one of the most recognizable corporations in the world.
1/8 share of the Stora Kopparberg mine, dated June 16, 1288.
Replica of an East Indiaman of the Dutch East India Company (VOC)
A bond issued by the Dutch East India Company (VOC), dating from 1623, for the amount of 2,400 florins
Chart of the South Sea Company's stock prices. The rapid inflation of the stock value in the 1710s led to the Bubble Act 1720, which restricted the establishment of companies without a royal charter.
"Jack and the Giant Joint-Stock", a cartoon in Town Talk (1858) satirizing the 'monster' joint-stock economy that came into being after the Joint Stock Companies Act 1844.
Lindley LJ was the leading expert on partnerships and company law in the Salomon v. Salomon & Co. case. The landmark case confirmed the distinct corporate identity of the company.

Registered corporations have legal personality recognized by local authorities and their shares are owned by shareholders whose liability is generally limited to their investment.

Piercing the corporate veil

Legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders.

McDonald's Corporation is one of the most recognizable corporations in the world.

Despite the terminology used which makes it appear as though a shareholder's limited liability emanates from the view that a corporation is a separate legal entity, the reality is that the entity status of corporations has almost nothing to do with shareholder limited liability.

Limited liability partnership

Partnership in which some or all partners (depending on the jurisdiction) have limited liabilities.

Example of an LLP office in the State of Georgia (U.S.)

In an LLP, some or all partners have a form of limited liability similar to that of the shareholders of a corporation.

Limited partnership

Form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner.

Example of an LLP office in the State of Georgia (U.S.)

Like shareholders in a corporation, limited partners have limited liability.

Anarcho-capitalism

Political philosophy that advocates the abolition of centralized states in favor of a system of private property enforced by private agencies, free markets and the right-libertarian interpretation of self-ownership, which extends the concept to include control of private property as part of the self.

Murray Rothbard (1926–1995), who coined the word anarcho-capitalism
The death of general Joseph Warren at the Battle of Bunker Hill during the American Revolutionary War, a war which anarcho-capitalists such as Murray Rothbard admired and believed it was the only American war that could be justified
4 Children for Sale, Chicago (1948).
The black and gold flag, a symbol of anarchism (black) and capitalism (gold) which according to Murray Rothbard was first flown in 1963 in Colorado and is also used by the Swedish AnarkoKapitalistisk Front
Lysander Spooner, an American individualist anarchist and mutualist, who is claimed to have influenced anarcho-capitalism
Benjamin Tucker, another individualist anarchist, who identified as a socialist and his individualist anarchism as anarchistic socialism versus state socialism, said to have influenced anarcho-capitalism
19th-century interpretation of the Althing in the Icelandic Commonwealth which authors such as David D. Friedman believe to have some features of anarcho-capitalist society

Rothbard argues that limited liability for corporations could also exist through contract, arguing that "[c]orporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, those men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation".

Joint Stock Companies Act 1844

The Joint Stock Companies Act 1844 (7 & 8 Vict.

A graphic representation of the legislative procedure in the United Kingdom.

However, there was still no limited liability and company members could still be held responsible for unlimited losses by the company.

Limited Liability Act 1855

A graphic representation of the legislative procedure in the United Kingdom.

The Limited Liability Act 1855 (18 & 19 Vict c 133) was an Act of the Parliament of the United Kingdom that first expressly allowed limited liability for corporations that could be established by the general public in England and Wales as well as Ireland.