What is a Public Company?

The term “public company” which also refers to a “publicly traded company” refers to a company with permission to sell its securities (stocks, bonds, etc.) to the public. This is usually managed via a stock exchange.

In most cases, the securities of a public company are owned by many investors, as opposed to the securities of most private companies, which are often owned by few individuals.

Companies that “go public” can raise funds by selling their securities. In fact, in the years before companies could become publicly traded, it was often terribly challenging to pull together bigger amounts of capital for private enterprises.

Public companies are able to offer their securities as compensation for employees. Securities from a public company usually have a market value that, at any given time, is assessed according to the stock exchange where the security is traded.

Public companies note that analysts and media personnel are able to have access to information about their business, which can add public interest to their company and assist in getting the word out.

Publicly traded companies generally must pay much more for the services of certified public accountants, due in large part to the significant amounts of paperwork required by the government regulations relating to publicly traded companies. Many of the laws that apply to public companies in the United States simply do not apply to private companies. For this reason, the details of the business and the income of the owners of private companies are less known to the public.

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