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CS Executive · Setting Up of Business, Industrial and Labour Laws · Selection of Business Organization

Arjun wants to raise funds from the public by inviting subscription to shares, and expects to have several thousand shareholders who can freely sell their holdings. Considering the factor of capital raising and transferability, which form of organisation is suitable?

A public company is suitable. It can invite the public to subscribe to its shares, has no limit on the maximum number of members, and its shares are freely transferable. Private companies, OPCs and LLPs cannot raise capital from the public in this way.

  1. ALimited Liability Partnership
  2. BPrivate company
  3. CPublic companyCorrect
  4. DOne Person Company

Explanation

A public company can invite the public to subscribe to its securities and its shares are freely transferable. A private company restricts transfer and cannot invite the public. An LLP has no shares, and an OPC has a single member, so neither suits thousands of shareholders.

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