Explaining a worldview

We are all stakeholders of limited liability entities – they have an obligation to us all.

Everything belongs to society, don\’tcher know?

6 thoughts on “Explaining a worldview”

  1. In an effort to put the most charitable interpretation on this, to some extent the utterer has a point. Society shouldn’t own an limited liability organisation. However, given that limited liability is “gift” society grants, some limited obligations would seem in order. Otherwise a limited liability oragnisation may be tempted in some circumstances to take the most outrageous risks which if they payoff makes them a fortune, but if they go wrong means the most they can lose is their original stake with all other losses incurred by the society which granted them the limited liability in the first place. Given that, it would seem fair that an ltd is obligated not to take risks which could result in costs greater than the value of the company.

  2. Eg a consider a company that owns nuclear power plants. When doing its cost benefits analysis to work out what level of saftey should be attained, it should work out the cost of the saftey measures vs the cost to society if there is a leak, NOT the cost of the saftey measures vs the cost of the company. (I am guessing here that a large scale leak would cost society more than the value value of a company)

  3. “We are all stakeholders of limited liability entities – they have an obligation to us all.”

    Oh, I have just seen where the quote came from. Forget my previous comments, I suspect these bastards mean rather more by “obligation to us all” than I mean by it.

  4. ChrisM-I can agree with your contention re Nuke safety measures. However, at least in the USSA, these are dictated to the builder-operators of the plants by a Government agency. It is doubtful that the toatl of the required measures (at present) would survive any reasonable cost benefit analysis even for a plausable worst-case failure event.

  5. ChrisM: I agree with you point re Nuke safety measures, but it isn’t germane as few such enterprises will turn over less than a million per annum.

    I’m the director of a limited company that employs one person, borrows nothing and owes nothing, but I’m still obliged to have an annual audit, costing seven hundred quid and serving no purpose whatever apart from keeping bureaucrats in work.

    If audits are such a great idea for the company, doubtless the company will be willing to pay for one.

  6. Brian, I was just seeking to play devils advoate and point out the original comment was not 100% wrong (only 99% wrong maybe). My example is indeed not germane to many/most enterprises. I was deliberately hunting for some extreme example where there is an obligation to society, and had to look hard to find such an example.

    And to be fair, you DO have an obligation to not loose more than the value of your company. But that is pretty much where the obligation begins and ends. I am not arguing for the specfic hoops that you are being made to jump. I am pointing out though that in principle limited liabilty is a privilige that entails some obligations, although not of the variety that the tax research bastards no doubt have in mind.

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