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

Which of the following is a typical distinguishing feature of a private company compared with a public company?

A private company is generally prohibited from offering its shares or debentures to the public, unlike a public company. It can still have limited liability, individual shareholders and a small board, so the public offer restriction is the distinguishing feature.

  1. AIt must have a larger number of directors
  2. BIt may not have any shareholders other than other companies
  3. CIt is generally prohibited from offering its shares to the publicCorrect
  4. DIt cannot have limited liability for its members

Explanation

The key difference is that private companies cannot make public offers of their securities, whereas public companies can. Private companies can have limited liability and have no larger board requirement. They may have individual shareholders.

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