Which of the following is not a justification of limited liability?

Question

Quizplus · Accepted Answer

Limited liability encourages investment by members (shareholders) of the company because it limits their financial risk to the amount they have invested in the company, not their personal assets. It also facilitates the transferability of shares by making the investment less risky, which can attract more investors. Limited liability offers clarity as to the assets of the company because it separates the company's assets from the personal assets of its members. However, it does not directly encourage investment by creditors; creditors lend money based on the company's ability to repay, not on the limited liability protection afforded to shareholders.

Which of the Following Is Not a Justification of Limited