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SharePoint 2013 - Only a limited set of people are allowed to share this content error

SharePoint provides a feature to the users to "Share" the site or the content to other users or groups and grant permissions to the same.
But sometimes an error is thrown "Only a limited set of people are allowed to share this content" while a share attempt is made in spite of the user having the desired permissions.

Solution:

 Enable "Allow access requests" under the Access Requests Settings.

Access Requests Settings could be found under Site Settings->Site permissions.

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