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Limited Liability
Jhangeer Hanif

From time to time, we come across terms like ‘limited’ or ‘private limited’ in our daily life. These terms are usually inscribed on the wraps of the articles we purchase and are always preceded by the name of the manufacturing or the distributing company. The concept is that the company, whether it is public or private, will pay off the liabilities in case of insolvency only to the extent that proceeds accrue by disposing of its assets. Once these proceeds are consumed up, the remaining liabilities will not be paid by disposing of other personal assets of those responsible for the failure of the business. It needs to be noted that assets of such enterprises, which are no longer going concerns, often devalue and therefore do not allow even paying off the short term liabilities not to mention the long term. In case of public limited companies, shareholders, who are counted as actual owners of the enterprises, also add to the list of losers. Sadly, all the stakeholders (parties who have interest in the business) suffer for no reason. Key management personnel, who are vested with the right to manage the business on behalf of the shareholders, contrive to play foul games: they play, earn and amass astoundingly big bucks and then plead in the court of law for liquidation (insolvency). For one, the case of Taj Company Limited may be cited; Enron the Energy Giant is another fresh example to quote here. Both give us an insight into the tyranny of limited liability.

This is a man made law in which he is responsible only to the extent of investment made into the business. On the contrary, the divine law will hold every person responsible till all debt is paid off. There is no concept of limited liability in the Hereafter. Each and every penny embezzled in this world shall be recovered in the world to come. The medium of exchange to pay off debts will be the good deeds done in here. As the good deeds are consumed up, evil deeds of the losers will be transferred into the account of the embezzler. He will watch justice being dispensed in a perfect manner. No lawyer will be able to come forward and feign the facts. No provision of imperfect laws will save his skin from the grievous penalty that his own evil actions entailed. Try as he may, he would fail to deny the facts and figures that would be presented before him; every member of his body will serve as a witness against him. Should he have ignored the eye opening declaration that the Holy Book of Allah proclaimed in the world:

And whosoever does the slightest good will see it then. And whosoever does the slightest evil will see it then. (99:7-8)

 No one will suffer without a reason. Void will be the provision of transferring the liability. Whosoever cultivates will come to reap exactly what he grows. Everyone would feel heavily burdened; everyone would be preoccupied with contemplating his own fate. No relationship or friendship will serve man and he will stand alone before the Judge, the Almighty. The Holy Qur’ān negates the very notion of transferring the liability in very simple yet meaningful words:

No laden one shall bear another’s load. (53:38)

It is high time that we envisaged the stark reality of our life in the Hereafter—immensely fair without impartiality and injustice; entreat our Lord to forgive us for our past mistakes and make an utmost sincere commitment to always tread the right path.


* This provision to incorporate companies with limited liability was enacted and enforced in the Sub continent long before the idea of Pakistan was conceived. This has been fully appreciated and adopted by the Companies Ordinance 1984. While trying to save the shareholders from undue loss that may be caused by ignorant or fraudulent conduct of the directors, the legislative bodies have ended up risking the interest of many stakeholders.

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