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‘Limited company offer flexibility. Capital and enterprise can be brought together”. Anyone can tell me the meaning of this sentence ?
Before the development of limited liability companies,shareholders were exposed to risk that their personal assets could be used to cover the liabilities of an enterprise in which they invested.This led to individuals being reluctant to invest unless they were involved in management of enterprise and thought there was little risk to enterprise in question.With development of limited liability companies potential shareholders could limit potential liability to unpaid share capital on shares they owned in a business.
Before the development of limited liability companies,shareholders were exposed to risk that their personal assets could be used to cover the liabilities of an enterprise in which they invested.This led to individuals being reluctant to invest unless they were involved in management of enterprise and thought there was little risk to enterprise in question.With development of limited liability companies potential shareholders could limit potential liability to unpaid share capital on shares they owned in a business.This allowed people with capital to invest in companies even if they did not want to be directly concerned with their management.It also allowed them to take greater risks with their capital knowing maximum exposure was amount unpaid on shares capital they owned.This in turn allowed specialist directors and managers to run companies.
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