Company

### A company is a legal entity that primarily distinguishes itself by which characteristic? - [ ] Having multiple shareholders - [x] Having a separate legal identity from its members - [ ] Being able to operate internationally - [ ] Having perpetual succession > **Explanation:** A company is primarily characterized by being a distinct legal entity separate from its members, allowing it to own assets, incur liabilities, and engage in contracts. ### What does "limited liability" enable shareholders of a company to do? - [ ] Sue the company - [x] Restrict their financial loss to their investment - [ ] Manage the company directly - [ ] Borrow money in the company's name > **Explanation:** Limited liability restricts shareholders' financial responsibility to the amount they have invested in the company, protecting their personal assets. ### What distinguishes a public limited company (PLC) from a private company? - [x] The ability to offer shares to the public - [ ] Higher share capital requirements - [ ] More restrictive business operations - [ ] Less stringent financial transparency requirements > **Explanation:** Public limited companies (PLCs) can offer shares to the public, while private companies cannot, making PLCs more suitable for raising large amounts of capital through public investments. ### Which document must a public company typically disclose to meet legal requirements? - [ ] Personnel records - [ ] Employee contracts - [x] Annual report - [ ] Internal memos > **Explanation:** Public companies are required to disclose their annual report, which includes detailed financial statements and other relevant information. ### Which term refers to the founders' protected capital invested in a company? - [ ] Debt capital - [ ] Liquid capital - [x] Share capital - [ ] Revenue capital > **Explanation:** Share capital refers to the invested funds provided by shareholders which protect their personal liability and form the financial foundation of a company’s equity. ### What legal structure does a company need to separate ownership from its operations? - [x] Corporation - [ ] Partnership - [ ] Sole proprietorship - [ ] Joint venture > **Explanation:** A corporation allows for a separation of ownership from its operations, enabling it to act as a legal person distinct from its shareholders. ### How is a company allows shareholders to participate in decision-making? - [ ] By direct management involvement - [x] Through voting rights on major decisions - [ ] By regular consultations - [ ] By executing daily operations > **Explanation:** Shareholders participate in a company’s decision-making process indirectly through voting rights on key issues like electing the board of directors and approving major changes. ### Which type of company allows unrestricted transfer of shares? - [ ] Private company - [x] Public limited company - [ ] Statutory company - [ ] Chartered company > **Explanation:** Public limited companies (PLCs) allow shareholders to freely buy and sell shares in the market, providing liquidity and mobility in ownership. ### What primary purpose usually drives the formation of a statutory company? - [ ] Maximizing profits - [ ] Operating globally - [x] Fulfilling a public or governmental function - [ ] Meeting private interests of founders > **Explanation:** Statutory companies are often formed to fulfill specific public or governmental functions as determined by legislative acts. ### What significant characteristic does an incorporated company hold? - [ ] It has limited operations - [ ] It is immune to market changes - [x] It can own property in its own name - [ ] It avoids corporate tax > **Explanation:** An incorporated company can own property, enter into contracts, and be involved in litigation in its own name, which is an essential attribute of its distinct legal identity.