What characterizes a limited company?

A limited company is primarily characterized by the fact that it is a private company where the owners' liability is limited to the amount they have invested in the company. This means that if the company faces financial difficulties or legal issues, the personal assets of the shareholders are generally protected. The liability of the owners is limited to their shares; thus, shareholders are not personally accountable for the company's debts beyond their investment. This structure encourages investment as it mitigates risk for owners.

While other choices describe certain aspects of company structures, they do not accurately capture the essence of a limited company. For example, while a limited company does limit personal liability, it specifically refers to private entities and does not apply to public companies that are listed on stock exchanges, which have different regulatory and liability frameworks. Similarly, a company owned by a single individual would not fall under the definition of a limited company, as it lacks multiple owners or shareholders. This is why the definition focusing on legally limited owner liability in a private context is the most accurate representation of what characterizes a limited company.