Western Governors University (WGU) BUS2040 D076 Finance Skills for Managers Practice Exam

Privately held companies are characterized primarily by the fact that their ownership is restricted and not available to the general public. This means that shares of these companies are not listed on public stock exchanges, and ownership is typically limited to a small group of investors, such as the company's founders, family members, or a few private investors.

This restriction on ownership allows the company greater control over its operations and decision-making without the added pressures that come from being publicly traded. Companies can keep their financial performance and business strategies more confidential, which can be advantageous in a competitive industry.

While some might assume that privately held companies may operate without any regulations or limits on share ownership—factors addressed in other options—this is not the case. They still operate within a legal framework and may have their own regulations to follow. Additionally, there are no strict rules on the number of shareholders for privately held firms as long as it aligns with their articles of incorporation or bylaws, making the suggestion that they cannot have more than a certain number of shareholders misleading.