Limited liability (Swedish: begränsad ansvarighet) means that the owners of a company as a rule only risk the capital they have invested. The principle applies mainly to shareholders in a limited company and to members of economic associations. The company is a separate legal entity that is itself responsible for its debts.
Limited liability is an important reason why the company must have share capital and follow the capital protection rules in the Swedish Companies Act. In certain exceptional cases, owners or the board can still become personally liable, for example if the rules are not followed.
A limited company is a business form that is its own legal entity and is owned through shares.
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A legal entity is an organisation that can have its own rights and obligations, such as a limited company.
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Share capital is the capital the shareholders contribute to a company in exchange for shares.
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A shareholder is a person or company that owns one or more shares in a limited company.
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