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Limited Liability Protection
Protecting your personal assets from business liabilities under the Companies Act, 2013
What is Limited Liability?
📌 Overview
Limited liability means that the personal assets of directors and shareholders are protected from business debts and liabilities. Under the Companies Act, 2013, a company is a separate legal entity distinct from its members. Your personal savings, property, and other assets cannot be seized to pay company debts.
✅ Key Benefits
Liability is limited to the unpaid amount on shares held. Directors and shareholders are not personally liable for company debts. This encourages entrepreneurship by reducing financial risk.
⚖️ Legal Framework
Section 2(22) of the Companies Act, 2013 defines limited liability. The landmark case of Salomon v Salomon LEGAL_CONTENT Co Ltd (1897) established this principle. However, directors can be held personally liable for fraud or wrongful trading under Section 447.
Important FAQs
❓ FAQ 1
Can directors be personally liable? Yes, in cases of fraud, wrongful trading, or personal guarantees.
❓ FAQ 2
Does limited liability apply to all companies? Yes, for Private Limited, Public Limited, and OPC under the Companies Act, 2013.
Protect Your Personal Assets
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