Ron owns five percent of a corporation’s common stock. The concept of limited liability would imply that Ron is personally responsible for only five percent of the financial obligations of the corporation. A. TrueB. False
Business · High School · Thu Feb 04 2021
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B. False
The concept of limited liability means that an investor in a corporation, such as a shareholder, is not personally responsible for the company's debts and financial obligations beyond the amount of their investment. This means that if the corporation were to fail or have debts, Ron, as a holder of five percent of the company's common stock, would potentially lose the value of his investment, but he would not be personally liable to pay five percent of the corporation's financial obligations. No matter the size of his investment in the company, Ron’s personal assets are protected from the creditors of the corporation.