This episode is about the
concept of limited liability and it's role in entrepreneurship.
- The purpose of the limited liability principle is not to
protect the entrepreneur as director or manager of a business, it
is for the protection of investors.
- There is a big difference between this principle and how the
actual law of limited liability works in practice. The law is messy
and confusing, with strange concepts such as "corporate personhood"
granted by the State.
- I argue that the principle of limited liability for investors
could be implemented through contracts and that the whole messy
legal implementation that we currently have is unnecessary to
achieve investor protection.
- I argue that it makes sense for entrepreneurs to use
contractual limits of liability wherever possible and to
use insurance whenever you need to reduce risk in that
- The reality for small business entrepreneurs is that you will
not be able to hide behind a shield of limited liability, for
example you will be expected to personally underwrite loans.
These are just my opinions. As always, you need to rely on your own
due diligence and get your own legal advice.