Question

Why is the principle of limited liability important for shareholders in a joint stock company?

विकल्प

• It allows shareholders to transfer shares freely.

• It restricts the financial loss of shareholders to the unpaid value of shares.

• It ensures shareholders participate in daily management.

• It makes shareholders responsible for company debts.

Answer 1

It restricts the financial loss of shareholders to the unpaid value of shares.

Explanation:

The principle of limited liability is important because it limits a shareholder’s losses to the unpaid value of their shares. They are not personally liable for company debts, which promotes investment in joint stock companies.