Multiple choice

Compared to a public company, a private limited company is at a disadvantage because

(a) it cannot invite public to subscribe to its shares (b) it has to observe restrictions on transfer of its shares because the number of members is limited (c) it has limited growth due to less shareholders (d) it cannot obtain loan from a bank

  1. (a) to (d) are correct

  2. (a), (b) and (c) are correct

  3. (a), (c) and (d) are correct

  4. (b), (c) and (d) are correct
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The following are the disadvantages of private limited company: The shares in a private limited company cannot be sold or transferred to anyone else without the agreement of other shareholders. It has limited growth and restricted number of shareholders. It is not allowed to invite public to subscribe to its shares.

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