In one sentenceA company founded by one or more persons, in which a partner is liable for its debts only up to the amount of their share in the capital.
Simply put
A common form for small and medium businesses. Its capital is divided into shares (stakes) that are not offered for public subscription, and the partner's liability is limited: if the company fails, their personal assets are not claimed except in cases set by law.
It is run by one or more managers appointed by the partners, and the details of incorporation, transfer of shares, and reserves are in the Companies Law and the company's contract.
Example
Three partners founded a limited liability company, and one of them holds a share of 100,000 SAR. If the company fails, and this partner has not personally guaranteed its debts or violated the law, the most he can lose is his share, and nothing is claimed from his personal assets.
Don't confuse it with
Sole proprietorshipA sole proprietorship's finances are not separate from its owner's, so the owner is liable for its debts with all their assets, while a limited liability company is an independent legal person.