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CS Executive · Setting Up of Business, Industrial and Labour Laws · Identifying Laws applicable to various Industries and their Initial Compliances

Three friends plan a manufacturing venture that will raise funds from the public through an IPO in a few years. Which entity form is the only one among these that permits this?

A public company is the form that can invite the public to subscribe to its securities and list on a stock exchange. Private companies, One Person Companies and LLPs are barred from raising capital through a public offer, so they do not fit the plan.

  1. APrivate company
  2. BLimited Liability Partnership
  3. COne Person Company
  4. DPublic companyCorrect

Explanation

Only a public company may offer its securities to the public and list on a stock exchange. A private company restricts transfer of shares and prohibits invitation to the public to subscribe. LLPs and OPCs cannot make public offers of securities.

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