New Delhi, Aug. 31 -- Limited liability is regarded as a key innovation for its liberation of risky capital ventures from a business owner's fear of ruin. Long ago, the concept's failure to restrain shocking corporate actions, as in British East India Company's case, made rules of governance necessary.

Today, Argentina's proposal to allow AI-run companies has revived a debate on whether limiting investor liability to the money they invest could be reckless.

In India, the concept is rendered fuzzy by group structures with cross-subsidies woven into a web of listed and private entities under single control. Personal guarantees for loans have thus been part and parcel of India's credit market.

This blurring of debt liability is legitimate...