PRC-3 · Chapter 2 · Question 42 of 61
Horizon Textiles (Pvt) Ltd takes out a Rs. 10 million loan from a commercial bank to buy new looms. If the company defaults, who is legally responsible for the debt?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The company itself, Horizon Textiles (Pvt) Ltd
Explanation
A limited company is a separate legal entity. It incurs debts in its own name, and thanks to limited liability, shareholders' personal assets are protected.
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