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

Question

Quizplus · Accepted Answer

The principle of limited liability means that the shareholders of a corporation are only liable for the debts of the corporation up to the amount of their investment. Therefore, option A, which states that a corporation is liable for its own debts, follows this principle.

Option B mentions a director being liable for a car accident, which is not related to the principle of limited liability. Option C suggests that a shareholder is liable for the corporation's debt beyond their investment, which contradicts the principle of limited liability. Option D mentions shareholders repaying corporate property, which is not directly related to limited liability. Option E suggests that shareholders are providing personal guarantees for loans, which again goes beyond the principle of limited liability.

Regarding Corporations, Which Statement Follows the Principle of Limited Liability