Editorial: Limited Liability

Nikitha Srinivasan

In the United States, a limited liability corporation, LLC, is a corporate structure that shields its owners from individual responsibility for the firm’s debts or liabilities. Limited liability is a significant benefit for any company since it balances out the drawbacks of having more internal conflicts, double taxation, and losing personal assets. Limited liability not only benefits the corporation’s investors but the whole firm. If the company they invested in ever suffers a big loss, the limited liability protects them from suffering a significant loss. If an ethical lapse in a company happened, whoever was involved in committing the unethical decision should be held to unlimited liability. 

The difference between unlimited liability and limited liability is that in unlimited liability, the business owner is personally accountable for any mistakes while in limited liability, there is no personal risk. If the ethical dilemma was indeed an unintentional choice, I think the people responsible should be held at limited liability. Furthermore, Limited liability protects the business from substantial financial losses if anything were to ever go wrong.

An example of criminal activity that was unintentional by the company is Tylenol. The Tylenol pills were laced with cyanide, a chemical deadly to humans. Over a few days, seven people died in Chicago. It was later found out that the packaging was tampered with. Most markets predicted that the company would never recover from this incident.  Tylenol has started making tamper-proof packaging. This is a perfect example showing a criminal activity that is not intentional by the company. If only the company or/and the employees who work there are guilty of an ethical lapse, they should be charged with unlimited liability but if the company is innocent they should not have to suffer. 

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