Comment by Negitivefrags | Hacker News Reader

Comment by Negitivefrags | Hacker News Reader

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The entire concept of the company was created for Limited Liability. Without that you are basically just a partnership.

You need limited liability or investment becomes a very risky prospect. Imagine investing to get a 10% stake in a startup company and they end up getting sued because they violate some patent accidentally?

The current situation all comes down to intent. The way it's supposed to work is that if someone was actually negligent in their duty, then, and only then, do they become personally liable.

You say the fact that it was stolen is irrelevant. Lets say someone ram raids the office, holds a gun to the CEOs head and demands the keys to the bitcoin. Do you think that he should be personally liable in that situation?

My point is that shit happens in business, debts can be created in unexpected ways and sometimes those debts can be far in excess of what was invested. It's not really reasonable to expect shareholders to be personally liable come what may.

I agree that the concept of limited liability is critical to modern capitalism and entrepreneurship, but I think you may be mistaken about the history of companies.

The concept of corporations is based on a legal identity that is separate from any individual. Incorporation historically was a rare grant at the behest of the ruling monarch. This dates back to the Roman Emperors, who granted incorporation to municipalities, guilds, and religious groups. However, these corporations are distinct from what we would consider a company today. The typical business did not have access to incorporation.

Several of the oldest known companies, dating back to the 6th century, were Japanese companies that were family-owned, and were not legally limited in liability. The concept of joint-stock companies is based on transferable shares, and dates back to at least the 13th century. Limited liability was not really a legal concept (separate from royal charters) until the 19th century. The first joint-stock companies in England were unlimited liability, and the public was very much opposed to the concept of liability limitation. However, many joint-stock companies wrote liability limitation clauses in contracts with creditors, and these were considered legally enforceable. In the second half of the 19th century, most European and US states had adopted limited liability laws. Limited liability is a modern concept that has not existed for most of the history of companies.

"You say the fact that it was stolen is irrelevant. Lets say someone ram raids the office, holds a gun to the CEOs head and demands the keys to the bitcoin. Do you think that he should be personally liable in that situation?"

Well, that all depends on what sort of agreement I had with the institution in question. This is precisely the sort of thing that insurance is supposed to fix. If the owners failed to get insurance to cover whatever agreement they went in to, then yes, they should be held fully liable for the losses.

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