Which term describes a company with limited liability that can issue shares to family and friends if all workers agree?

Which term describes a company with limited liability that can issue shares to family and friends if all workers agree?

• A. Plc
• B. Ltd
• C. Co-Operatives
• D. Franchise

Answer: (B)

Understanding different company structures and how shares can be owned helps explain this question. A private limited company, shown by Ltd, provides limited liability to its owners, meaning personal assets are protected if the business fails. It can raise funds by issuing shares, but only to a small, private circle rather than to the general public. That makes it possible to issue shares to family and friends, as long as the company remains private and follows its Articles and any required approvals. A public limited company, by contrast, can sell shares to the public, which doesn’t fit the idea of restricting share sales to a small group. A co-operative is owned and run by its members with decision-making typically based on democratic principles, which is a different model from issuing private shares to relatives. A franchise is a licensing arrangement, not a distinct company form focused on share ownership. So the term that fits both limited liability and the ability to issue shares to a small circle is private limited company.

Understanding different company structures and how shares can be owned helps explain this question. A private limited company, shown by Ltd, provides limited liability to its owners, meaning personal assets are protected if the business fails. It can raise funds by issuing shares, but only to a small, private circle rather than to the general public. That makes it possible to issue shares to family and friends, as long as the company remains private and follows its Articles and any required approvals. A public limited company, by contrast, can sell shares to the public, which doesn’t fit the idea of restricting share sales to a small group. A co-operative is owned and run by its members with decision-making typically based on democratic principles, which is a different model from issuing private shares to relatives. A franchise is a licensing arrangement, not a distinct company form focused on share ownership. So the term that fits both limited liability and the ability to issue shares to a small circle is private limited company.