ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality
Amara and Bola want to start a trading business. They want their personal assets protected from the business's debts, and they do not want to offer shares to the general public. Which type of company best meets their needs?
A private company limited by shares is best. Members' liability is limited to any amount unpaid on their shares, so personal assets are protected, and the company is not permitted to offer shares to the public. Unlimited companies lack this protection, and a public company is unnecessary.
- AA private company limited by sharesCorrect
- BAn unlimited company with a share capital
- CA public company limited by shares
Explanation
A private company limited by shares gives members limited liability, capped at any unpaid amount on their shares, and it is not permitted to offer its shares to the public. An unlimited company would leave members personally liable for all debts on a winding up. A public company is designed for public share offers, which they do not want.
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