Eli5: why the shareholders in a company are not liable to pay debts owed by the company?
In: 181
Because they already have. If the company goes majorly into debt to the point their stock price decreases or they go bankrupt altogether the shareholders have essentially paid for some of that debt as they would get less money back than they put in.
If you invested $5 in a company and then the company got insanely deep in debt it would be ridiculous for them to come and say “well you invested $5 and we took that but you’re involved so now we’re taking more money from you.” It would also be a potential avenue for fraud – start a company, get minor investors, pay an exorbitant amount of money for something from a business partner, don’t ever do any work to make money, extract even more money from the people who had only invested a little bit in the first place by going belly up and forcing those investors to pay the debt.
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