Skip to content

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

Kestrel Ltd is a private company limited by shares. Its directors wish to raise money by inviting the general public to subscribe for new shares through a public advertisement. Which statement is correct under the usual rule distinguishing private and public companies?

Kestrel Ltd generally cannot offer shares to the public while private. The defining difference is that only a public company may invite the public to subscribe for its securities, so Kestrel would first need to re-register as a public company.

  1. AA private company may offer its shares to the public if it advertises widely
  2. BA private company is generally prohibited from offering its shares to the public, so it would first need to re-register as a public companyCorrect
  3. COnly a company limited by guarantee may offer shares to the public
  4. DAny company with limited liability may offer shares to the public

Explanation

The key distinction is that a public company may offer its securities to the public while a private company generally may not. Kestrel would need to convert to public status first. Limited liability alone does not give the right to offer shares publicly, and guarantee companies have no share capital.

Did you get it right without looking?

One question tells you little. A timed set on Corporations and legal personality shows your real accuracy, how long you take and where you lose marks.

Practise Corporations and legal personalityFree diagnostic mock

More Corporations and legal personality questions