Which structure typically restricts shares to private investors and not the general public?

Which structure typically restricts shares to private investors and not the general public?

• A. Private Company
• B. Sole Trader
• C. Public Company
• D. Partnership

Answer: (A)

Ownership and how shares are distributed determine who can own them. A private company is set up to keep ownership within a small group of private investors; it does not sell its shares to the general public and typically places restrictions on transferring shares, often requiring approval from directors or existing shareholders. This keeps control and ownership private rather than widely dispersed. In contrast, a sole trader has no shares to issue and is owned by one person; a partnership is owned by the partners and also does not issue public shares. A public company, on the other hand, offers shares to the general public and is listed on a stock exchange, making its ownership widely accessible.

Ownership and how shares are distributed determine who can own them. A private company is set up to keep ownership within a small group of private investors; it does not sell its shares to the general public and typically places restrictions on transferring shares, often requiring approval from directors or existing shareholders. This keeps control and ownership private rather than widely dispersed.

In contrast, a sole trader has no shares to issue and is owned by one person; a partnership is owned by the partners and also does not issue public shares. A public company, on the other hand, offers shares to the general public and is listed on a stock exchange, making its ownership widely accessible.