ACCA Applied Skills · Corporate and Business Law (Global) · Business, political and legal systems
Lumen Co is a public company whose shares are offered to and freely traded by the general public on a stock exchange. Which feature distinguishes it from a private company in most jurisdictions?
A public company may offer its shares to the general public, whereas a private company generally may not. Both types have separate legal personality and limited liability for members, so those features do not distinguish them.
- AIt has separate legal personality, which a private company lacks
- BIt may offer its shares to the public, which a private company is generally prohibited from doingCorrect
- CIts members have unlimited liability for its debts
Explanation
Both public and private companies have separate legal personality, so option 0 is wrong. Members of a company limited by shares have limited liability, so option 2 is wrong. The key distinction is that only a public company may offer its securities to the public.
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