PRC-3 · Chapter 2 · Question 51 of 61
The founders of a tech firm incorporate as a Private Limited Company. A key legal characteristic that distinguishes them from a Public Limited Company is that they are legally prohibited from:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Inviting the general public to subscribe to their shares
Explanation
Private limited companies restrict the right to transfer shares and strictly prohibit any invitation to the general public to subscribe for their shares or debentures.
More Ownership of Business MCQs
- Q53A major disadvantage of operating a business as a Sole Proprietorship is the concept of unlimited liability. What does this mean for the…
- Q54A group of independent local grocers forms an organization to jointly purchase inventory in bulk at a discount. They run the organization…
- Q55A charitable foundation collects donations to run a free clinic. Since it does not exist to make a profit for owners, it does not prepare…
- Q56While limited companies protect shareholders from business debts, this protection is not absolute. Under corporate law, if a company…
- Q57A prominent lawyer is invited to sit on the Board of Directors of a major automotive firm. She attends monthly meetings to review…