Which type of business can raise capital by selling shares?

Which type of business can raise capital by selling shares?

• A. Sole trader
• B. Partnership
• C. Limited company
• D. Franchise

Answer: (C)

Raising capital by selling shares comes from having share capital, which only a limited company has. A limited company is a separate legal entity that can issue shares to investors, letting them buy ownership stakes and provide funds in exchange for a claim on profits. Sole traders and partnerships aren’t set up with shares, so they must rely on personal funds, loans, or bringing in new partners rather than selling shares. A franchise is a business model, not a legal form that inherently allows sharing ownership through shares, so it doesn’t by itself enable raising capital in that way.

Raising capital by selling shares comes from having share capital, which only a limited company has. A limited company is a separate legal entity that can issue shares to investors, letting them buy ownership stakes and provide funds in exchange for a claim on profits. Sole traders and partnerships aren’t set up with shares, so they must rely on personal funds, loans, or bringing in new partners rather than selling shares. A franchise is a business model, not a legal form that inherently allows sharing ownership through shares, so it doesn’t by itself enable raising capital in that way.