The formal definition is a type of legal structure for an organization where a corporate loss will not exceed the amount invested
The practical definition can be summarized as 'corporations can get away with great atrocities and not be liable'. The full story is deeper than this - in that limitation of liability prevents one from losing their entire fortune if their business goes under. While this sounds positive on the surface - the reality is that limitation of liability - as simple as it sounds - means that you can do bad thigs, and not be responsible for them. This is a fundamental principle for how enterprise works. This absolves individuals from responsibility, and thus The Corporation becomes legally enabled to perform atrocities without holding responsible parties to accountability. This is a fundamental flaw in how enterprise works, and the resulting human and environmental abuses evidenced today are part of this irresponsbility.
The solution is to prescribe certain norms - such as 'do not leave something in a worse condition than you found it'. Simply put - 'just don't be an asshole.' The current legal systems and norms so far have failed to provide an ethical alternative. That alternative begins with individual responsibility, starting with obvious principles such as not stealing or killing.
Limited liability is not a sound a-priori principle of enterprise operation, and its antidote is accountability or ethical enterprise. This means that into existing structures, standards, and norms of enterprise operation - we must inject norms that make enterprise operation ethical.
Ethical behavior can start with social conditioning of ethical behavior as a norm. Currently, the practice is that various institutions of society reward unethical, as opposed to ethical, behavior. This must change for humans to enter the next economy - the ethical economy. We define an ethical economy as one that is open source and collaborative as some of its most basic principles. Because today's economy is thoroughly based on proprietary knowhow, open-sourcing of the economic process is one of the most important things for society to achieve on a global level.