Which of the following best describes a characteristic of a private limited company?

• A. Shares are publicly traded
• B. Owners have unlimited liability
• C. Shares are sold only privately
• D. It cannot be owned by individuals

Answer: (C)

A private limited company (often abbreviated as Ltd) is characterized by its share structure and ownership limitations. The defining characteristic of a private limited company is that it does not trade its shares on public stock exchanges; instead, shares are sold privately among a limited number of investors. This structure allows the owners to maintain a higher level of control over the company, ensuring that the ownership remains within a close group, such as family members and business partners.

The implications of this characteristic are significant; it typically restricts access to capital since shares cannot be sold to the general public. Owners of a private limited company also benefit from limited liability, meaning they are only liable for the company’s debts up to the amount they have invested in shares. This distinguishes them from sole traders or partnerships where owners might face unlimited liability. Moreover, a private limited company can indeed be owned by individuals, contradicting one of the other options. Thus, the emphasis on private share sales is what makes option C the best descriptor of a private limited company.