Please, write a main discussion post about the below statement and respond to the two teammate discussion posts attached. Thank you
"Do corporations benefit from shareholder's limited liability? If so, how?"
Decide if you agree or disagree with this statement. State your decision and provide your reasoning for this week’s Discussion assignment.
See document attached for more instructions.
Instructions for main post (Around 200 words) Please, write a main discussion post about the below statement: "Do corporations benefit from shareholder's limited liability? If so, how?" Decide if you agree or disagree with this statement. State your decision and provide your reasoning for this week’s Discussion assignment. (Citations only needed for main post) Instructions for the two classmate responses (around 150 words each) Please, respond to the below two classmate main posts. (Please, the responses need to be a discussion, not an evaluation. You can agree with them and add/comment about their response.) Thank you Classmate post #1: Andrew Welfel Corporations do benefit from the shareholder’s limited liability. The limited liability of shareholders means that shareholders are not held personally liable for any obligations the corporation might have (Clarkson, Miller, & Cross, 2018, p. 741). In other words, if a corporation has outstanding debt or is involved in a lawsuit, only the corporation owes anything. The individual shareholders, or investors, are not bound to those sorts of obligations. The benefit of this for a corporation is that it attracts shareholders. Investors would not want to buy stock in a company if they felt their personal assets were at stake in the event of a lawsuit or failure of the company to pay debts. This corporate protection, combined with the favorable tax rates from dividends and capital gains, allows corporations to keep investors – something that is vital to thrive and survive. Corporations must be careful, though, in keeping minutes, filing annual reports, and operating within the scope of the law. Broemmel (n.d.) states, “If a corporation fails to comply with legal requirements, shareholders end up exposed. For example, a person with a claim against a corporation out of compliance with the law theoretically can seek compensation directly from sharehodlers” (para. 6). Investors should also be careful when choosing corporations in which to invest. Investors do not want a situation where the corporate veil could be pierced and they end up personally liable. References Broemmel, Mike. (n.d.). Limited Liability of Shareholders. Retrieved from https://smallbusiness.chron.com/limited-liability-shareholders-3711.html Clarkson, Miller, & Cross. (2018). Business Law (14th ed.). Cengage Learning Classmate post # 2: Michelle Cocking “Yes, corporations afford shareholders protections from business liabilities and debts. Although the business itself does not have limited protections, the business absorbs any liabilities, while the owners/shareholders do not have to pay for such obligations from their personal assets“ (“Do corporations,” n.d.). In the instance of a lawsuit, only the corporation’s assets are subject to seizure and not the personal assets of the owners/shareholders. One of the significant benefits of forming a corporation is the limited liability aspect. “Normally, corporate shareholders are not personally liable for the obligations of the corporation beyond the extent of their investments” (Clarkson, Miller & Cross, 2018, p. 741). Corporations or Limited Liability Companies from a legal standpoint create a protective legal barrier between the shareholders and the company. However, shareholders jeopardize their protection from liability if the corporation only has a few owners or the business fails to maintain corporate meeting minutes and other types of required legal requirements or documentation. Therefore, the owners/shareholders benefit from a corporate business status as far as limited liability, not the entity itself. References Clarkson, Miller, and Cross. Business Law. 14th edition (2018). Cengage Custom (Digital First). Do corporations have limited liability: everything you need to know. (n.d.). Retrieved on September 23, 2019 from https://www.upcounsel.com/do-corporations-have-limited-liability