Limited liability business forms are generally created by the government. Given this fact, to what extent is it appropriate for the government to interfere in the operations of such a limited liability entity?

Answer:

Limited liability business refers to the business in which the liability of the owners of the firm is limited to the percentage of ownership they hold in the firm. Since there is a high probability that a start-up might fail, limited liability business is not allowed to be established in many countries and it is strictly governed by the Company's Act 2013 passed by the government. But the involvement of the government in any business is appropriate to the extend till it does not affect the day-to-day activities and profits of the company.

The involvement of government in a limited liability business is appropriated to the following given extend:

1. The interference should not harm the everyday activities of the firm: The government interference should not stake up the daily activities of the people working in a limited liability as it may affect the sales indirectly which will, later on, be blamed on the people working there.

2. The profits and value of the firm should not be affected: When the government is involved in a business, there is always some type of commission given to the government or subsidies provided by the government to the underprivileged section of the society which is generally sponsored by government subsidiaries. So while doing such activities, the profit or value of the firm should not go down to a level from which recovery is impossible.

3. The reputation of the company should not be sabotaged: While the involvement of government is necessary to a extend, the company should not get involved in government affairs and diplomacies which may bring down the reputation of the company.