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When a person buys the shares of a company, he becomes the owner of that company as he has invested some amount in the total capital of the company. This gives a right to that person to share in the rewards and risks of the company but only to the extent to which he has instead. If he owns 20 percent of the company then his risks and rewards will also be twenty percent of the profit or loss. This is limited liability which means that in case the company dissolves then the person can only lose the money invested in the company; his personal property cannot be sold to pay off the debts. The loss is limited to the amount invested. Unlimited liability exists in unincorporated companies where the owner and the company are not considered to be separate and even the personal belonging of the owner can be sold to satisfy the debts.
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