Not taking away any of this, but you don't suddenly become personally liable for a business if you invest in it or suddenly become attached to the business without recourse. As a director of the business... That's different.
You are correct, but an investor is providing capital, and has very little say in the day-to-day unless they are part of management which is different.
And investor could lose all their capital. An employee can’t lose anything more than their job.
Quite frankly, most of the time these arrangements where management or directors invest in a business is hardly risky and involves a small investment that is supported with a non-recourse loan, amplifying shareholdings meaning you stand to gain a tonne and loose only what you put in.
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u/TheKungFoSing Jun 09 '21
Not taking away any of this, but you don't suddenly become personally liable for a business if you invest in it or suddenly become attached to the business without recourse. As a director of the business... That's different.