IGCSE, A Level Business Student Forum

Q17 Does limited liability make it easier or more difficult for companies to attract new shareholders. Analyse. [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[KN] Attracting a diverse investor base
[AN] Limited liability can attract a broader and more diverse range of investors, including those who may have significant personal assets to protect
[AN+] This diversity can lead to increased investment capital and can provide the company with a wider pool of expertise and resources.

[KN] Easier transportation of ownership
[AN] In companies with limited liability, ownership shares are often easier to buy and sell.
[AN+] This liquidity in the ownership interest can make it more appealing for investors who want the option to enter or exit their investment relatively easily.

[KN] Investor Confidence
[AN]Limited liability also fosters investor confidence in the fairness and legality of the business structure.
[AN+] This confidence is a crucial factor for individuals considering investing in a company, as they want assurance that their investment is protected and that they are treated fairly as shareholders.

[KN] Capital Attraction
[AN] Limited liability encourages investors to provide capital to the company, as it reduces the perceived risk associated with investing.
[AN+] Companies can leverage this confidence to raise funds for growth, expansion, and investment in new projects.

[KN]Limited liability means that shareholders are only liable for the amount they have invested in the company
[AN]Their personal assets are protected in case the company faces financial difficulties.
[AN+]This provides a level of security and reduces the risk for potential shareholders. They know that their losses are limited to the amount they have invested, and they are not personally responsible for the company's debts or liabilities beyond that

[KN]shareholders can potentially be held personally responsible for the company's debts and liabilities.
[AN]This can be a significant deterrent for potential investors. The prospect of unlimited liability can be a major source of concern, as it puts their personal assets at risk.
[AN+]This may lead them to be more hesitant or selective when considering investment opportunities.

(Kn) a beneficial attraction for investors (an) since limited liability offers them to not be forced to pay if the business goes in debt, it is favourably looked upon(an+) thus it encourages investors to buy shares free of risk of being infected
(Kn)confidence in firms capabilities (an)since the business offers such legal and benefits for shareholders it makes it look like a well standing business (an+) this improves its brand image and helps the investors to decide from which company to buy shares from

[KN] Attracting Investors
[AN] limited liability offers the workers not to force pay the amount in the business goes into a debt
[AN+] thus investors have opportunity to buy shares which will be free of any risks

[KN] More Capital attraction
[AN] limited liability forces investors to provide capital to the firm as it reduces the risks associated with investing.
[AN+] thus leading to growth as funds would be available for the firm.

[KN] boost investors confidents
[AN] this gives the shareholders the confidences of investing in a business
[AN+] increased in demand results in higher share value

[KN] Growth Opportunities
[AN] Companies can raise capital more easily through the sale of shares
[AN+] lowing them to fund expansion, research, and development

[KN] Risk reduction.
[AN] Limited liability means shareholders personal assets are not at risk to cover company's debts etc hence providing confidence and sense of security.
[AN+] This reduces financial risk for investors making the prospect of investing in the company more attractive.

[KN] Investor Confidence.
[AN] The assurance that personal assets are shielded increases investment as they know their financial exposure is limited to the amount invested in shares.
[AN+] Thus this will lead to innovation and economic growth.

Kumail Alvi wrote: ↑Thu Nov 02, 2023 3:15 am [KN] Investor Confidence
[AN]Limited liability also fosters investor confidence in the fairness and legality of the business structure.
[AN+] This confidence is a crucial factor for individuals considering investing in a company, as they want assurance that their investment is protected and that they are treated fairly as shareholders.

[KN] Capital Attraction
[AN] Limited liability encourages investors to provide capital to the company, as it reduces the perceived risk associated with investing.
[AN+] Companies can leverage this confidence to raise funds for growth, expansion, and investment in new projects.

first analysis point is not giving a clear direction, neither is the 2nd analysis point but its not as bad

[kn] range of investors
[an] many investors have significant personal assets they want to keep secured therefore having limited liability provides a broader range of investors willing to invest
[an+] as lesser risk is associated with investing capital raising there confidence in investing helping to fund for businesses future growth
[kn] there is easier transportation of ownership
[an] as in companies with limited liability ownership shares are often easier to buy and sell
[an+] This liquidity in the ownership interest can make it more appealing for investors who want the option to enter or exit their investment relatively easier

[KN]limited liability means shareholder is only responsible for amount invested in the business
[AN] therefore, personal property of the shareholders is not at risk
[AN] hence in case of business failure shareholders will not have to worry about lawsuits

[KN]Higher confidence
[AN]With limited liability, a shareholder would know the amount they'll loose
[AN]therefore this makes investment decisions easier for them

[KN] Risk reduction.
[AN] Limited liability means shareholders personal assets are not at risk to cover company's debts etc hence providing confidence and sense of security.
[AN+] This reduces financial risk for investors making the prospect of investing in the company more attractive.

[KN] Investor Confidence.
[AN] The assurance that personal assets are shielded increases investment as they know their financial exposure is limited to the amount invested in shares.
[AN+] Thus this will lead to innovation and economic growth.

KN]limited liability means that a shareholder is only liable for the amount they invested in the business [AN]. As a result, their personal property is safe [AN], and in the event that the business fails, they won't have to worry about lawsuits.

] Mitigation of risk. [AN] Limited liability gives investors peace of mind and security because their personal assets are not at risk of being used to pay off the company's debts or other obligations. (AN+)As a result, investors have less financial risk, increasing the allure of investing in the business.

(KN) Attraction for shareholders
(AN) As if a business gives limited liability to shareholders, if the business goes into debt they won't be forced to pay for the debts of the business,
(AN+) hence this encourages shareholders to buy the shares of the business more freely making it easier for the business, without having any risk of losing anything if the business fails.

(KN) Encourages more capital investment
(AN) Limited liability encourages investors to provide capital to the company, as it reduces the perceived risk associated with investing.
(AN+) Companies can leverage this confidence to raise funds for growth, expansion, and investment in new projects.