Unit 1- Private Limited Company Flashcards
What is a private limited company?
A private limited company is a type of business entity that limits the liability of its owners and restricts the transfer of its shares.
True or False: Private limited companies can offer shares to the general public.
False
What does ‘Ltd’ stand for in a company name?
‘Ltd’ stands for ‘Limited’, indicating that the company is a private limited company.
Fill in the blank: A private limited company must have at least ___ shareholders.
One
What is the maximum number of shareholders allowed in a private limited company?
Typically, a private limited company can have up to 50 shareholders.
True or False: The owners of a private limited company are personally liable for the company’s debts.
False
What document is required to register a private limited company?
A Memorandum of Association and Articles of Association.
What is the primary advantage of forming a private limited company?
The primary advantage is limited liability protection for its owners.
Multiple Choice: Which of the following is NOT a characteristic of a private limited company? A) Limited liability B) Share ownership restricted to the public C) Separate legal entity D) Ability to raise capital through public shares
D) Ability to raise capital through public shares
What is the role of shareholders in a private limited company?
Shareholders own the company and have the right to vote on key issues, such as the appointment of directors.
Fill in the blank: A private limited company must file its accounts annually with the ___ .
Companies House
True or False: Private limited companies can easily convert to public limited companies.
True
What is the minimum share capital required to start a private limited company in the UK?
There is no minimum share capital requirement, but it is typically set at £1.
What is a key disadvantage of a private limited company?
A key disadvantage is the restriction on the transfer of shares, which can limit liquidity for shareholders.
Short Answer: How does a private limited company differ from a sole proprietorship?
A private limited company has a separate legal entity and limited liability, while a sole proprietorship does not.
What is one major disadvantage of a private limited company regarding ownership transfer?
Ownership transfer is restricted and cannot be freely sold or transferred without consent from other shareholders.
True or False: Private limited companies can raise capital through public stock offerings.
False
Fill in the blank: Private limited companies are subject to more _______ than sole proprietorships or partnerships.
regulation
What is a common disadvantage related to taxation for private limited companies?
They may face higher tax rates compared to sole traders or partnerships.
Multiple Choice: Which of the following is a disadvantage of a private limited company? A) Limited liability B) Limited access to capital C) Unlimited lifespan D) Separate legal entity
B) Limited access to capital
