Limited liability of shareholders means
A)dividends will be paid regardless of profits.
B)creditors have no legal claim on a shareholder's personal assets.
C)the life of the corporation is limited.
D)deferral or reduction of taxes.

Question

Quizplus · Accepted Answer

Limited liability of shareholders means that their personal assets are protected from creditors in case the company faces financial difficulty or bankruptcy. This is an important feature of a corporation as it encourages investment and promotes entrepreneurship by limiting the downside risks for investors. The other options are not accurate descriptions of limited liability.

Limited Liability of Shareholders Means