Examkin

Question

Difficulty: EasyPrivate Limited Companies: Characteristics, Formation Documents, and Capital

A private limited company is legally prohibited from inviting members of the general public to subscribe to its shares.

Answer: Answer

Answer

True
Private limited companies are defined by key legal restrictions, one of which is the prohibition against issuing a prospectus or inviting the general public to subscribe to their shares or debentures.

Step-by-Step Solution

1
Examine the statutory characteristics of a private limited company regarding share issuance.
Private limited companies have legal restrictions preventing them from issuing a public prospectus.
The legal framework for business organizations restricts public solicitation of capital to public limited companies to protect public investors.

Key Concept

Public share subscription restrictions of Private Limited Companies
Rate this question

Topics

Private Limited Companies: Characteristics, Formation Documents, and Capital

More questions from this topic