This is a privilege extended to companies registered as limited companics under the Companies Acts. It means that members of those companies, i.e. those providing the share capital, cannot be asked to contribute more than the nominal value of the shares registered in their names.
In the case of companies limited by guarantee, the liability of members does not extend beyond the amounts initially guaranteed. The nominal value of the shares or the amount of the guarantee will appear in the Memorandum of Association and also in the annual accounts. The memorandum must also state that the liability of members is limited and the word ‘hmited’ or, in the case of public companies. the words ‘pubhc limited company’ or ognized abbreviations thereof must appear after the company’s name. Failure to fulfil these requirements could revoke limitation of liability.
Reference: The Penguin Business Dictionary , 3rd edt.