Limited Liability Company Case Study

The three predominant features of a limited liability company are limited liability, judicial person, and tradable shares.

The limited liability is a condition in which the owners or shareholders cannot be held completely liable for the company’s debts and liabilities. The shareholder does not lose anything else except their shares, when the company goes bankrupt. Their liabilities are somehow limited to the extent of the value of the company’s shares that these shareholders possess or the amount of capital that they have invested in the company. Consequently, it is beneficial for both the company and shareholders considering the fact that the company can be expected to secure substantial amount of investment capital from the shareholders

During that time, limited liability existed in guilds, monastic entities or shipping industries. However, this idea of the limited liability company had only expanded and amplified markedly during the sixteenth and seventeenth centuries or in other words, during the period of colonialism and imperialism. Many corporations and large associations depended on charters permitted by the monarch or state authorities to establish their own trade routes to enjoy as the monopoly of trade with the colonies. The first chartered joint-stock company was the Muscovy Company, which was finally given its charter in 1555. (page18) However, the main companies which issued stocks and had limited liability in this era were the Dutch East India Company (Vereenigde Oost-Indische Compagnie) and the British East India Company which conducted trade with the East Indies. They were also the premature forms of the multinational corporation. Moreover, they enjoyed close interactions and relationships with the state, and possessed armies for conquering lands of South

The role of the company to be a good corporate citizen and to be engaged in corporate social responsibility have become important and become global challenge as globalization expands. Corporate Social Responsibility or CSR is about how companies and organizations behave towards the society and it is seriously considering the impact of their actions on society. During the Second Industrial Revolution, stakeholder capitalism drove the economy and the companies began to engage in the social responsibilities towards all the stakeholders involved. CSR was an integrated part of whole political economy. The firm was an institution that cares and took responsibilities of all its stakeholders. However after the transition of the Second Industrialization to the Third Industrialization in the 1970s, the business philosophy has changed from stakeholder capitalism to shareholder capitalism. The corporate statesman has been overthrown and the firm is no longer an institution, but the property of the shareholders to maximize financial