The word ''limited written after the name of a company means that
COMMERCE
WAEC 2021
The word ''limited written after the name of a company means that
- A. it has a democratic system of management
- B. members are liable to the extent of their shareholdings only
- C. the company is a going concern
- D. profit is determined by management
Correct Answer: B. members are liable to the extent of their shareholdings only
Explanation
This means that in the event that the company folds up and its assets are liquidated, the liabilities of the company are only limited to the invested amount or the assets of the company. Simply put, if a company folds up, the private properties or assets of the owners of the company cannot be used to settle investors (debts). Only business assets can be used to settle the legal obligations of the company to shareholders or investors as the case may be.
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