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http://eprints.lse.ac.uk/100058/1/Goodhart_CEPR_DP13494.pdf

What would be the disadvantage of limiting the liability to the product of the proportion of the company and the debt(a person with 2% of a limited company is liable for 2% of that company's debts) instead of limiting the liability to the value of their investments? Maybe add a safety net to protect the investors from majority shareholders, and family.

I.e what would happen with the economies of scale? Are there any other disadvantages we could infer from analysing the shareholders as economic agents and the decisions?

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