Eli5: why the shareholders in a company are not liable to pay debts owed by the company?
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The idea behind this system is that you should only be able to lose as much as you put in to begin with. So if your shares are worth 1 million, you can’t lose more than 1 million, which of course you would pay by simply liquidating those same shares when the company goes bankrupt.
Of course, this draws the expected criticism that you can lose no more than you put in, but you can gain far more than that…
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