I've always been confused by this. Apparently, as I understand it, you can register a company for a small sum of money in Western countries, for example the USA or Sweden, which then become its own "person".
That is, no matter how grossly you mismanage it, it's the company that will take on debts -- not you (or your co-founders) personally. So even if you spend like crazy with the company's money/loans, and then can never pay it back, you can just "fold" the company (shut it down) and you, the actual human being, goes free to start another company, with zero debt/jail time. And whoever lend you money is stuck with no way to get it back.
This always seemed crazy to me. As if the system was created specifically to encourage all sorts of abuse and reckless behaviour.
What is the reasoning behind this, if true? Why don't they make the humans who started/own the company personally responsible for the company's debts? How can they just go: "Oh, you lost a few million on this business? You could never repay it? Not a problem! We'll just fold the company and 'write it off'. Done! Have a great day! By the way, would you like to start another one while you're here?"
Something tells me that it can't be like that. If so, why would anyone ever have a company that is tied to you personally? It's not like the amount of money required for an "Aktiebolag" or "AB" ("stock company" in Sweden), currently 25,000 SEK, is a massive amount of money. So as long as you have that amount, you never have to worry about any financial problems with your company because it will never affect you personally?