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Benefits to commerce of shielding members from personal liability

Explain the processes of the benefits to commerce of having shareholders and other entities that shield their members protected from personal liability? Would commerce be better served if personal liability would attach to those individuals for the misdeeds of their entity? Why or why not?

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Step 1
The processes of benefits to commerce of entities that shield their members from personal liability is it enables the entities to have a separate existence from the members who operate/own the business. Shielding their members from personal liability also protects the entity from dying with the death of the "owner" (member). The protection from limited liability enables the individual members to focus on running and managing the entity efficiently. If the member becomes bankrupt the company does not become bankrupt, but continues to function. This limited personal liability enables the introduction of new investors and new capital. When taxation is levied on an entity where there is no personal liability, a wider variety of deductions is allowed.

Step 2
However, the protection from ...

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