Large companies need capital from a wide group of investors. Ordinary shareholders cannot supervise every daily management decision, borrowing arrangement or supplier contract.
Limited liability separates the company's business exposure from each investor's personal wealth and therefore helped modern corporations mobilize large pools of capital.
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Limited Liability: The Modern Concept and the Shari‘ah Question
Large companies need capital from a wide group of investors. Ordinary shareholders cannot supervise every daily management decision, borrowing arrangement or supplier contract.
Limited liability separates the company's business exposure from each investor's personal wealth and therefore helped modern corporations mobilize large pools of capital.