A Limited Liability Company is a company where the owners of the company are typically not liable for the debts of the company.
In the UK the rights of Ltd companies, and the rules they must follow are specified in The Companies Act 2006. This is rather a big piece of legislation, but it is actually quite readable.
In a nutshell, a Limited Liability Company acts like a 'Artificial Person' or Entity. So much like a 'Real Person' i.e. you and me, a Company has rights and obligations. A Company can sign a contract, purchase goods and can be prosecuted.
Usually, the owners and the directors of the company are protected from being personally liable for the Company's actions and debts. However, in order to be protected by this legal shelter the directors of the company must act in specific ways, this is known as their fiduciary duty.
The fiduciary duties of a director are defined in the Companies Act. Directors who have breached their fiduciary duty risk being personal liable for the actions of the company. Prosecuting a director directly for a company's actions is known as 'to pierce the corporate vale'.