Question

why the liability of a company is unlimited?
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Answer 1

yo demon here

first we need to understand what is limited and unlimited liability

limited liability---> in this the owner will only have to bare those liabilities which he/she invested in business.

example -> if a person is a part of company and if the company is under any liability then the person will have to pay the amount which he have invested in the company. he don't have to give anything from his personal property.

unlimited liability--> in this the owners liability is unlimited which means if the loan is not recovered from the business then the owner has to sell his personal property to cover the loan.

example--> let's take an example of sole proprietorship in which the business have taken some loan which the business was not able to pay then the creditors can take control over proprietor's personal property to cover the loan

here in case of company as we know that in this there is no specific owner of the company like sole proprietorship and other forms of business. company have its own seperate legal entity due to which if the company will be liable to pay any amount to anyone then the company have to bare on its own.
the person who have invested their shares in this will be liable to pay only that amount that they have invested the shares.
other than that they don't have to give anything.

this is the reason why company has unlimited liability where as it's investors have limited liability.

Answer 2

Answer:

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