Public Company

Public Company is a company whose shares are traded freely on a stock exchange. It is also known as a publicly listed company, or a public limited company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. It is a business whose shares can be freely traded on a stock exchange or over-the-counter. Although a small percentage of shares are initially floated to the public, daily trading in the market determines the value of the entire company. A public company issues shares through an IPO and trades on at least one stock exchange.

A public company can be listed on a stock exchange (listed company), which facilitates the trade of shares, or not (unlisted public company). Public companies are publicly traded within the open market, and a variety of investors buy the shares. In some jurisdictions, public companies over a certain size must be listed on an exchange. The stocks of this type of company belong to members of the general public, as well as pension funds, and other large investing organizations.

A public company is a company whose shares are available to be purchased on the open market, usually one of the major stock markets. The ‘limited’ in ‘public limited company’ refers to the limitation of liability. This has two primary consequences:

  • Shareholders can only lose what they invest and are not liable for further losses of the company.
  • Shareholders cannot be legally pursued for debts, fraud allegations, or similar liability, except where the shareholder is a board member.

Public companies are formed within the legal systems of particular states, and therefore have associations and formal designations that are distinct and separate in the polity in which they reside. Many public companies go private to gain more control over the company and its decisions. In the United States, for example, a public company is usually a type of corporation (though a corporation need not be a public company), in France it is usually a “société anonyme” (SA), in Britain a public limited company (plc), and in Germany an Aktiengesellschaft (AG). While the general idea of a public company may be similar, differences are meaningful and are at the core of international law disputes with regard to industry and trade. In most cases, the stocks of a public company belong to many investors, while those of a private company are in the hands of comparatively few shareholders. The main advantage of private companies is that management doesn’t have to answer to stockholders and isn’t required to file disclosure statements with the SEC. The company is considered public since any interested investor can purchase shares of the company in the public exchange to become equity owners.