Answer:
Owners' liability is limited to the amount they invested in the firm. Stockholders are not are responsible for any encumbrances of the firm; in particular, they cannot can be required to pay back any debts incurred by the firm.
Explanation:
The phase is the definition of the term limited liability.
Limited Liability is the salient feature of a corporation. It protects the shareholders and properties in the event of a dissolution. The limited liability feature has given many investors confidence to invest in companies and corporations. The risk of the investor is restricted to the level of his or her investments in the company.
Should the company collapse, shareholder's properties are protected and cannot be used to settle any debts that the assets of the company cannot pay. As such, businesses can raise capital with ease from different categories of investors.
