Public company

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A public company is a company that offers shares of its stock to the public, usually via a stock exchange or in the over the counter market. The company issues securities through an initial public offering.

Public companies have some advantages over private companies, such as the ability to sell future equity stakes and increased access to the debt markets. They can raise funds and capital through the sale of securities. They can also issue their securities as compensation for their directors, officers and employees. Private companies can do this as well, but the securities are often hard to sell on the open market.[1]

Disadvantages include increased regulatory surveillance and less control for founders and majority owers. A public company must answer to its shareholders, who can vote on certain changes in corporate structure. They can also "vote" by bidding the shares up or selling them down. Public companies must report to the Securities and Exchange Commission (SEC) and disclose their financial statements and file annual 10-k reports.

References

  1. "public company" definition. Answers.com.