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Thoughts on limited liability (corporations and LLCs)

  • Thread starter Thread starter Deleted member 159002
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Opposed.

Corporations aren't people.
 
I don't see the problem with LLC's. Now immunity for government employees needs to be constrained on the other hand.
 
for public companies no way.

For private companies I don't have a huge issue with it but they should be required to have various insurance policies in place if they are performing certain tasks.
 
for private entities, i dont have a problem with it, though the rights of that llc can be worked out...
 
This is a more complex issue than presented here so far.

Do you mean total elimination of limited liability so any liability of the company can be gotten from the shareholders? That seems like it would be scary for mutual fund owners.
Example: I own a single share of BP. Government sues BP for damages. Government wins, and proves damages that exceed BP's assets. Do you want the government to be able to come after my assets to satisfy the damages?
 
I think limited liability is crucial to business and innovation.

If we didn't limit liability I think many people would avoid going into business, or would close their business down once they hit a certain level of success(where they had enough to lose in a lawsuit).

I can't imagine hiring anyone without limited liability either.
 
ncordless said:
This is a more complex issue than presented here so far.

Do you mean total elimination of limited liability so any liability of the company can be gotten from the shareholders? That seems like it would be scary for mutual fund owners.
Example: I own a single share of BP. Government sues BP for damages. Government wins, and proves damages that exceed BP's assets. Do you want the government to be able to come after my assets to satisfy the damages?
Click to expand...

Yes.
 
sabretruth said:
How?
Click to expand...

Because who would invest in a company if they were then liable for said companies liabilities? Do you remember when WorldCom went down? Imagine if they had been able to go after every shareholder and their assets to satisfy any and all debts WorldCom had incurred. Would any of those shareholders invest ever again? Would any sane person with money keep their money in the stock market after that?
 
ColonelAngus1 said:
Because who would invest in a company if they were then liable for said companies liabilities? Do you remember when WorldCom went down? Imagine if they had been able to go after every shareholder and their assets to satisfy any and all debts WorldCom had incurred. Would any of those shareholders invest ever again? Would any sane person with money keep their money in the stock market after that?
Click to expand...

Correct. Market risk would take on a whole new meaning.
 
Yes, it should be legal.

In LLC's where the shareholders and the management are the same people, you can still pierce the corporate veil and go after partners personal assets.

In the case of C corps, the shareholders rarely have any say in how the corporation is run and it doesn't make sense to hold them liable for actions undertaken by the corporation when their only involvement is owning stock. The people making the decisions can still be sued civilly if their actions exceed their work scope and there's nothing stopping the government from filing criminal suits against everyone involved in wrong doing.

What is the point of there not being limited liability?
 
People should be able to offer investments without it necessitating that the entire responsibility for everyone's bad judgment be borne by a select few. Don't like it, don't fucking invest.
 
panamaican said:
Yes, it should be legal.

In LLC's where the shareholders and the management are the same people, you can still pierce the corporate veil and go after partners personal assets.

In the case of C corps, the shareholders rarely have any say in how the corporation is run and it doesn't make sense to hold them liable for actions undertaken by the corporation when their only involvement is owning stock. The people making the decisions can still be sued civilly if their actions exceed their work scope and there's nothing stopping the government from filing criminal suits against everyone involved in wrong doing.

What is the point of there not being limited liability?
Click to expand...

I agree with you.

But I can see the point of there not being limited liability. There are a couple ways to get there. You could get there through moral duty, i.e. one could argue that it is morally just to impose a duty on investors to investigate what their investment hath wrought and withdraw from a liable action. Similarly, you could get there under a theory of culpability. Even though you might not be very culpable as an investor with no control over what the entity does, you are still more culpable than the innocent victim/creditor, especially if their actions are faultless. You could also get there with the idea that, in benefiting from the actions of the company through your part ownership thereof, you should compensate at the least for your share of the harm caused others.
 
Last edited:
crowded said:
People should be able to offer investments without it necessitating that the entire responsibility for everyone's bad judgment be borne by a select few. Don't like it, don't fucking invest.
Click to expand...



I say don't give em any limited liability and make that liability joint and several with no right of contribution. And while we are at it, let's get the government out making sure corporations have adequate assets to cover its liabilities. Let's make business and investing like a game of straws where everybody gets rich fucking everybody else over except once in a while a random person gets selected and fleeced so we can feel good about knowing that once in a while somebody gets punished for the evil things they do..
 
LLC are an interesting bit of technology in my opinion and their rise has enabled some of the great things we enjoy today. That said they aren't without cost. They effective take risk and shift it somewhere else and that is a recipe for disaster. The burden is shifted from the business owners, who are most able to handle the risks, to the public who is often unaware. This type of moral hazard should be troubling for anyone, but I think the question of if it should be supported or not comes down to values. If you think progress is the most important thing, then obviously you should support them, however if personal responsibility or fairness is the most important thing in your mind then they seem hard to support. LLC is more or less a subsidy, however it seems to be much more effective in general than other recipients.

Perhaps a slight tweaking of the legal structure would make them more balanced.
 
Stunted question deserves a stunted answer: Yes.
 
Yes. Crafty lawyers find a way to name members/shareholders in suits though. And well funded parties can remove themselves from such suits. System right now has a good balance. The entities are not impervious but provide some protection to encourage entrepreneurialism and business. Go too far, and you get sued personally with your llc.

if you dont like the system then demand personal guarantees and good collateral in your transactions.
 
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