International General Certificate of Secondary Education (IGCSE) Business Studies Practice Exam

A key characteristic of a private limited company (Ltd) is that shares can only be sold with shareholder agreement. This means that the company does not offer its shares to the general public, which helps maintain a level of control over who gets to own a part of the company. This restricts the transfer of ownership and allows existing shareholders to have a say in who may become a new shareholder, potentially ensuring that the company remains within a close-knit group of owners.

While public companies can sell shares freely to the public, private limited companies operate under more stringent regulations regarding share sales. This restriction also contributes to the stability of ownership and governance within the company, as the existing shareholders can protect their interests by controlling new share issuances.

In contrast, the other options presented do not accurately describe the characteristics of a private limited company. For instance, shares are not available to the public, and ownership is not limited to a specific number like five shareholders; instead, there can be up to 50 shareholders. Additionally, the tax rates applicable to profits for private limited companies are not necessarily lower than those for other business types; tax liabilities can vary based on different factors and are not inherently beneficial solely due to the company's status as a private limited entity.