Registered corporations have legal personality recognized by local authorities and their shares are owned by shareholders whose liability is generally limited to their investment. One of the attractive early advantages business corporations offered to their investors, compared to earlier business entities like sole proprietorships and joint partnerships, was limited liability. Limited liability separates control of a company from ownership and means that a passive shareholder in a corporation will not be personally liable either for contractually agreed obligations of the corporation, or for torts (involuntary harms) committed by the corporation against a third party (acts done by the controllers of the corporation).
Registered corporations have legal personality recognized by local authorities and their shares are owned by shareholders whose liability is generally limited to their investment. One of the attractive early advantages business corporations offered to their investors compared to earlier business entities like sole proprietorships and joint partnerships, was limited liability. Limited liability separates control of a company from ownership and means that a passive shareholder in a corporation will not be personally liable either for contractually agreed obligations of the corporation or for torts (involuntary harms) committed by the corporation against a third party (acts done by the controllers of the corporation)