Question
Identify and explain Two (2) other characteristics of private limited company
Answer
1. Limited Liability: Private limited companies have limited liability, which means that the shareholders' liability is limited to the amount of their investment in the company. This means that the personal assets of the shareholders are protected in case the company faces financial difficulties or goes bankrupt.
2. Restricted Transferability of Shares: Private limited companies have restrictions on the transferability of shares. The shares cannot be freely traded on the stock exchange, and the transfer of shares requires the approval of the board of directors. This ensures that the ownership and control of the company remain in the hands of a limited number of shareholders.