ExpertEasy1 markMultiple Choice
The formation and constitution of business organisationsSection ASyllabus DCorporate and Business Law
ACCA · Question 34 · The formation and constitution of business organisations
Which type of company must obtain a trading certificate from the Registrar of Companies before it can commence business or borrow money?
Which type of company must obtain a trading certificate from the Registrar of Companies before it can commence business or borrow money?
Answer options:
A.
A private company limited by shares (Ltd).
B.
A public limited company (PLC).
C.
A company limited by guarantee.
D.
An unlimited company.
How to approach this question
Identify the extra regulatory hurdle placed on companies that offer shares to the public.
Full Answer
B.A public limited company (PLC).✓ Correct
Under section 761 of the Companies Act 2006, a public company (PLC) cannot commence business or exercise any borrowing powers until it has obtained a trading certificate from Companies House, confirming it has met the minimum allotted share capital requirement (£50,000). Private companies do not need this.
Common mistakes
Assuming all companies need a trading certificate, or confusing the certificate of incorporation (which all get) with the trading certificate (only PLCs).
Practice the full ACCA LW — Corporate and Business Law Practice Exam 2
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