Which of the following statements about private limited companies is true?

• A. They are owned by shareholders who have one or more shares in the business; shares are sold privately to investors the business knows; shareholders have limited liability; they are controlled by a Board of Directors.
• B. They are owned by the government and trade on a public stock exchange.
• C. They must disclose all internal documents publicly.
• D. They cannot be controlled by a board of directors.

Answer: (A)

Ownership, liability, and governance define a private limited company. In this structure, ownership sits with shareholders who hold shares, but those shares are sold privately to individuals or institutions the business knows rather than on a public market. Shareholders have limited liability, meaning they’re only at risk for the amount they invested, not for the company’s debts beyond that. Governance is typically exercised through a Board of Directors, which provides strategic oversight and can appoint or remove managers. This combination—private shareholding, limited liability, and board-led governance—matches the statement.

The other descriptions don’t fit a private limited company: government ownership and trading on a public stock exchange describe a different form of business altogether, usually a public or state-owned company; private limiteds don’t require disclosing all internal documents publicly; and it’s common for such companies to be controlled by a board, not the opposite.