I’ve heard this about the US but never had it explained to me. What does it mean and are there any examples of this happening I can look into?
In: Economics
In the legal system they are treated as people. Just like a person, a company can hold property enter into contracts, and sue or be sued.
An example is Joe is a plumber. He can run his business as a sole proprietor. People pay him to unclog their pipes. Joe owns his own van, tools, and forms contracts for pipe unclogging.
Joe can start his own company. Joe LLC. Just like Joe did as an individual, Joe LLC (Limited Liability Corporation) owns the plumbers van, the tools, and enters into contracts to unclog pipes.
The advantage to having a company is Joe is then shielded from liability. If a pipe bursts while unclogging and he is sued as an individual, he can be sued for everything he has, but as an LLC, he is only sued for the assets of the company. It’s way more complicated than just this, but this is the gist.
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