why does a company cannot use personal property of shareholders to pay off business debts ?
Dear Kritika,
In a company, ownership and management are separate. In this regard, the liability of the owners is limited to the amount unpaid on the shares held by them. The entire liability is borne by the company itself in its own name. This means that in the event of winding up of the company, the liabilities of the company can be paid by selling the assets of the company.
In a company, ownership and management are separate. In this regard, the liability of the owners is limited to the amount unpaid on the shares held by them. The entire liability is borne by the company itself in its own name. This means that in the event of winding up of the company, the liabilities of the company can be paid by selling the assets of the company.