Question

Burt has come across an excellent recipe for a new beer, and he and 20 college friends decide to go into business. They form a corporation named New Brew Inc., issuing stock only to the 21 of them and not selling any stock outside the group. The beer is a huge success, and they soon need to expand. They decide to sell stock to members of the public to raise capital. What type of corporation is New Brew before the sale of stock to the public

Answer 1

Answer: Private Limited Company

Step-by-step explanation:

From the question, we are informed that Burt has come across an excellent recipe for a new beer, and he and 20 college friends decide to go into business and they form a corporation named New Brew Inc., issuing stock only to the 21 of them and not selling any stock outside the group.

We are further told that the beer is a huge success, and they soon need to expand and decide to sell stock to members of the public to raise capital.

Before the sale of stock to the public, the corporation is a private limited company. The limited number of shareholders in this type of business is 50 and it does not trade its shares publicly.