ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Which of the following best distinguishes a public limited company from a private limited company?
A public limited company may offer its shares to the general public, usually by listing on a stock exchange, while a private company may not. Both give shareholders limited liability. Public refers to share availability, not government ownership.
- AOnly a public company has limited liability for its shareholders
- BA private company cannot have more than one shareholder
- CA public company may offer its shares to the general public, usually through a stock exchange listingCorrect
- DA public company is owned by the government
Explanation
Both types give shareholders limited liability. The key distinction is that a public company may offer shares to the public, typically being listed, whereas a private company cannot. Public does not mean state-owned.
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