The success of trading activities in United Kingdom is attributed to the adoption of the limited liability concept in trading company formations. The concept of Limited Liability Company lets trade to flourish through enabling credit to be extended with minimum risk to the parties involved inside the company. In other words, the direct parties involved, which are the company’s shareholders, cannot be held liable for the debts of the company. Debtors cannot make any claims to a shareholder’s personal assets, thus only the shareholder’s interest or investment on that particular company is at risk.
Such legal limitation is formed in the UK through registering at the Companies House. The process is referred to as the Incorporation. It is popular to most investors who want to form a trading company in UK because their personal assets are protected by the limited liability concept of the company. Investors are aware of the volatility of the trading market and losses are always a possibility for every trade that they will make. By employing the limited liability concept in the formation of their trading company, their personal assets and interests are guaranteed to be protected. Only their interest on the trading company is at risk.