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ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality

Dalma Co is a private company limited by shares. Its directors wish to raise funds quickly. Which proposed action is generally prohibited for a private company but permitted for a public company?

Offering shares to the general public by advertised prospectus is generally prohibited for private companies but allowed for public companies. Issuing shares to members, bank borrowing and allotting shares to a director are open to private companies as well.

  1. AIssuing shares to existing members
  2. BBorrowing from a bank on a secured basis
  3. COffering its shares to the general public through an advertised prospectusCorrect
  4. DAllotting shares to a director

Explanation

Private companies are generally prohibited from offering their shares or debentures to the public, while public companies may do so. The other actions are open to both types, subject to the usual authorisation.

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