Why are Companies Limited?

By Vijay Kumar

PARTICIPATING in the debate on the Companies Bill in the Lok Sabha yesterday, KV Reddy, Member from Chevella said,

Growing up I always wondered why companies were called ‘Limited' like ABC Airport Limited and XYZ Steels Limited. Companies want to grow and increase their market share and have a bigger market share ever. But still they are called ‘Limited'. Then, I came to know the word ‘Limited' does not apply to their growth or to their aspiration. It applies to the liabilities of the owner directors, which means, companies can do unlimited damage, unlimited fraud but the liabilities of the owner directors are limited.