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Limited liability

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Definition of Limited liability

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Limited liability

Limitation of possible loss to what has already been invested.


limited liability

The owners of the corporation are not personally responsible for its obligations.



Related Terms:

limited liability company

an organizational form that is a hybrid of the corporate and partnership organizational
forms and used to limit the personal liability of the owners;
it is typically used by small professional (such as accounting) firms


Limited-liability instrument

A security, such as a call option, in which the owner can only lose his initial
investment.


Limited-liability instrument

A security, such as a call option, in which the owner can only lose his initial investment.


limited liability partnership

an organizational form that is a hybrid of the corporate and partnership organizational
forms and used to limit the personal liability of the owners;
it is typically used by large professional (such as accounting) firms



Unlimited liability

Full liability for the debt and other obligations of a legal entity. The general partners of a
partnership have unlimited liability.


General partner

A partner who has unlimited liability for the obligations of the partnership.


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Limited partnership

A partnership that includes one or more partners who have limited liability.


Limited partnership

A partnership that includes one or more partners who have limited liability.


Partnership

Shared ownership among two or more individuals, some of whom may, but do not necessarily,
have limited liability. See: general partnership, limited partnership, and master limited partnership.


Partnership

A form of business organization in which owners have unlimited personal
liability for the actions of the business, though this problem has been mitigated
through the use of the limited liability partnership.


Sole proprietorship

A business owned by a single individual. The sole proprietorship pays no corporate
income tax but has unlimited liability for business debts and obligations.


Asset/liability management

Also called surplus management, the task of managing funds of a financial
institution to accomplish the two goals of a financial institution:
1) to earn an adequate return on funds invested, and
2) to maintain a comfortable surplus of assets beyond liabilities.


Contingent Liability

An obligation that is dependent on the occurrence or nonoccurrence of
one or more future events to confirm the existence of an obligation, the amount owed, the payee,
or the date payable.


Contingent pension liability

Under ERISA, the firm is liable to the plan participants for up to 39% of the net
worth of the firm.


Cost of limited partner capital

The discount rate that equates the after-tax inflows with outflows for capital
raised from limited partners.


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Current liability

This is typically the accounts payable, short-term notes payable, and
accrued expense accounts on the balance sheet, or any other liabilities that are
expected to be liquidated within a short time interval.


Deferred Tax Liability

Future tax obligation that results from the origination of a temporary
difference that causes pretax book income to exceed taxable income.



Liability

A financial obligation, or the cash outlay that must be made at a specific time to satisfy the
contractual terms of such an obligation.


Liability

A dollar amount of obligation payable to another entity.


Liability

A probable future sacrifice of economic benefits arising from present obligations of
a particular entity to transfer assets or provide services to other entities in the future as a result of
past transactions or events.


Liability funding strategies

Investment strategies that select assets so that cash flows will equal or exceed
the client's obligations.


Liability swap

An interest rate swap used to alter the cash flow characteristics of an institution's liabilities so
as to provide a better match with its assets.


Limited partner

A partner who has limited legal liability for the obligations of the partnership.


Limited-tax general obligation bond

A general obligation bond that is limited as to revenue sources.


Master limited partnership (MLP)

A publicly traded limited partnership.



 

 

 

 

 

 

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