What is a drawback of a private limited company regarding financial information?

A private limited company (Ltd) is characterized by its ability to keep its financial information confidential due to its structure, which limits the number of shareholders and does not require it to publish its financial statements publicly. This is a significant advantage for many businesses, as it helps protect sensitive financial data from competitors and the wider market.

The choice that states financial figures are kept secret accurately captures this nature of private limited companies. They are not obliged to disclose their financial information to the general public, unlike public limited companies (Plcs), which must publish their financial statements for shareholder and regulatory scrutiny. This confidentiality can serve as a strategic benefit, allowing private companies to maintain a competitive edge without revealing their profit margins, revenue, and other financial metrics to competitors.

In contrast, other choices refer to various disadvantages or factors that do not apply directly to the private limited company’s handling of financial information.