Business Law (company law) Essay Example | Topics and Well Written Essays - 2000 words

Business Law (company law) - Essay Example In the event that partners or external third parties decide to file a lawsuit, in actual sense they would be suing only the company with the exclusion of investors/stockholders. They are not held liable for such matters as loans as well as other debts owed by the company. In contrast to them, investors, general partners, and sole proprietors are considered to be liable for such business debts all through. Limited liability is fundamental in the exclusion of certain parties from being held liable for such liabilities. Limited liability companies have a lot of advantages that I would say, arguably, outweigh the disadvantages regarding the same. It is therefore advisable that Robert, Sarita, and Phillip to start convert their company ‘IN THE EVENT’ into a limited liability company. The respective advantages of a limited liability company are as follows. The mere existence of a limited liability company provides for the limited liability security or protection to its own members or owners. This could be arguably the most imperative advantage of this form of company. They are basically not personally accountable for the company’s business debts and liabilities. Creditors are legally crippled to pursue the personal assets (houses, savings, and etcetera) of the business’s stakeholders in order to earn back their business debts (Macintyre, 2010). This is in contrast to many other contrasting forms of business. The only liability that members have to bear is that for the amount that they are yet to pay on shares. In the event that things do go wrong, the only losses encountered by the members would be the value of shares as well as any loans made by the members to the company. However, there is an ambiguity. The protection of limited liability companies does not go as far as to cover frauds. In the unfortunate occasion that creditors incur losses via direct fraud, there is no limit to personal liability. A limited liability company