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JAMB Principles of Accounts 2006 Question 18

Question 18

Company Accounts

A private company is different from a public company because

  1. A.it does not restrict the right to transfer its shares
  2. B.it cannot invite members of the public to subscribe for its shares
  3. C.its shares are owned by one person
  4. D.it can only offer its shares to members of the public for subscription.
Show the answer and explanation

Answer: B (it cannot invite members of the public to subscribe for its shares)

Explanation

A private company may not invite the public to buy its shares, and it restricts share transfers.