|
More than 5000 entries on the history, culture and life of Britain (published in 1993 by Macmillan, now out of print)
|
limited liability
|
|
A concept of great importance in the raising of capital for business, introduced in the Joint-Stock Companies Act of 1856. The act also imposed an obligation on companies to register details about themselves so as to avoid fraudulent promotions (the memory of the *South Sea Bubble long haunted British legislators). The essence of limited liability is that an investor can lose no more than the money spent in purchasing the shares. A company thus becomes an independent entity, solely responsible for its own debts. (An example of unlimited liability has survived into the 1990s among the members of *Lloyd's of London).
|
|
|
|
To warn creditors of this restriction, the act of 1856 specified that the word Limited (usually abbreviated to Ltd) had to follow the name of the company. Since 1980 this term has been reserved for private companies and for subsidiary elements of larger groups, not separately quoted on the Stock Exchange. For public companies, whose shares are traded on the open market, Ltd has been replaced by PLC (often printed plc), standing for Public Limited Company.
|
|
|
|