' Limited '

 Reliance Industries Ltd.

• Google India Private Ltd.
• Tata Motors Ltd.
• Samsung Electronics Private Ltd.
• LG Electronics India Private Ltd.
• Godrej Industries Ltd.

I have listed a few big companies here. Do you find anything common in those names?

Yes, it is the word “Ltd.”, which stands for “limited”. But do you know why they are called limited? We have grown so much used to that name that we never think about its meaning. We just see it as a trend that they follow while naming.

Well, it means exactly what that word says. These companies are limited.

Meaning, its members and shareholders (owners) only have a limited liability, depending upon the number of shares (unpaid) they hold at the time of its liquidation (bankruptcy).

In layman terms, if you hold 1% shares in a company, you have already paid for the 0.5%, and the rest are unpaid, and it goes bankrupt, you'll only have to bear the losses equal to the face value of those 0.5% shares, and will be liable to pay the face value of the 0.5% unpaid shares if asked for by the Creditors of the company. They can not ask you to pay the money from your own pocket or sell your assets, like house, to settle any outstanding debt.

And yes, as you might have figured out by now, there are also Unlimited companies in which the liability of investors in unlimited.

One big advantage of these companies is that they are much safer for a creditor (one who loans the money), as the shareholders are legally required to settle all disputes in case of bankruptcy and liquidation. They can not run away from their financial responsibilities.

You won't find many of those here in India, but there are quite a few in Ireland, Nigeria and the U.K. In fact Range Rover was an unlimited company up until 2013