ABSTRACT
The creation of the limited liability company shifted a great deal of business risk to creditors. Whereas, previously, a shortage of business assets on liquidation resulted in claims against the personal possessions of the owner, losses were now borne by the supplier of goods and loan finance. In a sense the position of the investor also became more risky. The development of the large scale limited company created a new species of shareholder which needed protection. This absentee investor had no direct involvement in management, and relied on the directors to behave in a trustworthy manner and use the capital efficiently. It was, however, the creditor's increased exposure to risk which attracted more attention from company lawyers.
