As individual legal entities, corporations assume liability for their own debts, so the shareholders hold only limited liability
A limited liability is a type of legal structure for an organization where business losses will not exceed the amount invested in a partnership or limited liability company (LLC). In other words, the private assets of investors and owners are not at risk should the company fail. In Germany it is known as Gesellschaft mit beschränkter Haftung (GmbH).
Limited liability is one of the biggest advantages of investing in publicly traded companies. While shareholders can participate fully in the growth of the business, their liability is limited to the amount invested in the business, even if the business later goes bankrupt and has financial liabilities unpaid debt.
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