Understanding Private Limited Companies

What is the primary role of shareholders in a private limited company?

• Choosing the director

• Managing daily operations

• Selling shares on the stock exchange

• Paying company taxes

Which of the following is a key feature of a private limited company?

• Unlimited liability for shareholders

• No need to publish financial accounts

• Shares are sold on the stock exchange

• Shareholders are known to the company

What is one advantage of limited liability for shareholders?

• Protection of personal assets

• Unlimited investment opportunities

• Increased personal risk

• Higher tax rates

How can a private limited company raise finance?

• By increasing personal savings

• Through equity and debt finance

• By selling shares on the stock exchange

• By issuing bonds

What is a potential disadvantage of having many shareholders in a private limited company?

• Increased control over management

• Access to more finance

• Higher prestige

• Dilution of profits

Why might a private limited company have limited access to finance?

• They do not publish financial accounts

• They have unlimited liability

• They have too many shareholders

• Shares are not sold on the stock exchange

What is a legal requirement for private limited companies that sole traders do not have?

• Publishing financial accounts

• Paying income tax

• Choosing their own director

• Selling shares publicly

What does the 'S' in the PLUMS mnemonic stand for?

• Stock exchange access

• Sources of finance

• Shareholder control

• Sales growth

In the PLUMS mnemonic, what does 'M' represent?

• Market share

• Management and control

• Marketing strategy

• Monetary policy

What is a key difference between private and public limited companies regarding shareholders?

• Public companies have no directors

• Private companies control shareholder selection

• Public companies control shareholder selection

• Private companies have unlimited liability