Which feature most clearly distinguishes a private company from a public company?
Correct answer: B. A private company restricts the transfer of its shares
- A. A private company has no legal personality
- B. A private company restricts the transfer of its shares
- C. A private company cannot own any property
- D. A private company is always owned by the government
Explanation
A private company generally restricts the transfer of its shares and does not invite the public to subscribe for its securities. It still has a separate legal personality and may own property.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Company Law Basics
Company law covers incorporation, separate legal personality, limited liability, shares, the memorandum and articles of association, and the powers and duties of directors. It also includes shareholder meetings, resolutions, company records, audit, winding up and the differences between a registered company, partnership and sole proprietorship.
Practise Company Law Basics
30 free Company Law Basics MCQs from Introduction to Business, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Introduction to Business questions like this
Introduction to Business is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Company Law Basics questions
What is the primary function of a company’s articles of association?
Which document primarily states a company’s name, registered office and objects?
What is the main legal effect of incorporating a company as a separate legal entity?
Under the Companies Act, 2017 of Pakistan, a one-person company is best described as:
What does limited liability generally mean for a shareholder?
Which security normally represents a loan made to a company rather than ownership in it?