If a company can't afford to compensate its directors such that they can afford insurance to cover their unlimited liability then that business's activity is too risky.

Limited liability just moves that risk to employees, suppliers, and customers of a business: they're the ones that do not get paid or delivery when a company fails.

"Poor" people can't afford to take any risks! Starting a risky business is only slightly less of a bad idea than developing a gambling habit.

[–] [email protected] 3 points 1 year ago* (last edited 1 year ago) (1 children)

What about starting a non-risky business, like a cafe? The insurance requirements will still be very high.

What I think you are looking for is, that LLC protections don't cover negligence....which is starting to come into law. Look at the health and safety at work act.

[–] [email protected] 2 points 1 year ago (1 children)

Why are the insurance requirements high? Because it's risky. Cafés survive only at the whim of very ficklest of customers.

[–] [email protected] 3 points 1 year ago (1 children)

But with unlimited liability, if your cafe fails, you lose the house and future earnings can be on the line also.

LLC is for financial protection, not for criminal and now it also doesn't cover health and safety negligence.

[–] [email protected] 0 points 1 year ago* (last edited 1 year ago)

But with unlimited liability, if your cafe fails, you lose the house

That's the point.

LLC limits that liability of the directors and only the directors. The liabilities are still paid for by someone. LLC just means that someone is someone else: probably supplies and employees who don't get paid.

If you can't afford to self insure your cafe, don't start a cafe.

I can't afford to start an investment bank, so I don't try.