Limited Liability
Legal structure protecting personal assets from business debts.
Formula
Liability = Limited to share capital invested
Real World
When Woolworths collapsed in 2008, its shareholders lost the value of their shares but were not personally liable for the company's £385 million debt — their personal assets were protected.
Exam Focus
Never confuse limited liability with no liability — shareholders still lose their investment; they just cannot lose personal assets beyond it.
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