Which of the following is a disadvantage of a private limited company?

• A. Shares cannot be sold publicly on the Stock Exchange, so there is a limited source of capital available.
• B. The company is exempt from filing financial accounts with authorities.
• C. It does not require any legal formation process.
• D. It can attract unlimited liability for owners.

Answer: (A)

The key idea here is how the way a private limited company raises money can limit its growth. Because its shares aren’t offered on a public stock exchange, it can’t access the broad pool of public investment. Financing has to come from the owners or private investors, which usually means a smaller, slower stream of capital and slower expansion compared with publicly listed companies.

The other statements don’t fit: forming a private limited company is still a legal process with registration required; owners’ liability is limited to their shareholdings, not unlimited; and private limited companies typically must file financial accounts with the authorities (even if there may be reduced audit requirements for very small firms).