Regarding corporations,which statement follows the principle of limited liability?

Question

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The principle of limited liability means that the owners or shareholders of a corporation are not personally liable for the corporation's debts or obligations. Therefore, choice A, where a director incurs liability for an accident while on company business, is not an example of limited liability. Choice B mentions shareholders providing personal guarantees, which would make them personally liable in case the company cannot repay loans, thus also not an example of limited liability. Choice D is not related to limited liability but rather to the distribution of assets in case of bankruptcy. Choice E involves payment of dividends, which is a distribution of profits and not relevant to limited liability. Choice C, that the corporation is liable for its own debts, is an example of limited liability, as it means that the shareholders are not personally responsible for the corporation's debts beyond their investment in the company.

Regarding Corporations,which Statement Follows the Principle of Limited Liability