Page "Companies law" Paragraph 26

The basic theory behind all business organizations is that, by combining certain functions within a single entity, a business ( usually called a firm by economists ) can operate more efficiently, and thereby realize a greater profit.

Governments seek to facilitate investment in profitable operations by creating rules that protect investors in a business from being held personally liable for debts incurred by that business, either through mismanagement, or because of wrongful acts committed by the business.