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Encyclopedia > Public company

A public company usually refers to a company that is permitted to offer its securities (stock, bonds, etc.) for sale to the general public, typically through a stock exchange. The term company may refer to a separate legal entity, as in English law, or may simply refer to a business, as is the common use in the United States. ... This article needs additional references or sources for verification. ... This article does not cite any references or sources. ... Look up bond in Wiktionary, the free dictionary. ...

Usually, the securities of a public company are owned by many investors while the shares of a private company are owned by relatively few shareholders. However, a company with many shareholders is not necessarily a public company. For example, in the United States, in some instances, companies with over 500 shareholders may be required to report under the Securities Exchange Act of 1934; companies that report under the 1934 Act are generally deemed public companies. The first company to issue shares is thought to be the Dutch East India Company in 1602. Public is of or pertaining to the people; belonging to the people; relating to, or affecting, a nation, state, or community; opposed to private; as, the public treasury, a road or lake. ... A private company is a company that is independently owned. ... The Securities Exchange Act of 1934 was a sweeping piece of legislation in the United States regulating the participants in the financial markets. ... This article needs additional references or sources to facilitate its verification. ...

The term "public company" may also refer to a government-owned corporation. This meaning of a "public company" comes from the tradition of public ownership of assets and interests by and for the people as a whole (public ownership), and is the less-common meaning in the United States. A government corporation or government-owned corporation is a legal entity created by a government to exercise some of the powers of the government. ... This article is about state ownership. ...

"Publicly owned company" can also have either meaning, although in the United Kingdom it will usually be interpreted as meaning a company in the public sector (being owned by national, regional or local government). The term "public limited company" or simply "PLC" would be used to unambiguously refer to a publicly-traded company in the private sector. < [[[[math>Insert formula here</math>The public sector is that part of economic and administrative life that deals with the delivery of goods and services by and for the [[government </math></math></math></math> Direct administration funded through taxation; the delivering organisation generally has no specific requirement to meet commercial... The private sector of a nations economy consists of all that is outside the state. ...


United Kingdom

In the UK, a public company is a company that has registered as a public company at Companies House by the alteration of its name to include the suffix "plc" or "public limited company", and which has received a certificate stating that it has an issued share capital of no less than £50,000. If there are fewer than two shareholders, the sole shareholder is liable to a fine[citation needed]. Companies House is an Executive Agency of the United Kingdom Government Department of Trade and Industry (DTI). ... The initials PLC after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. ... The issued share capital of a company is the total nominal value of the shares of a company which have been issued to shareholders and which remain outstanding (ie. ...

A public company is subject to much more stringent filing and accounting requirements than a private company. It is therefore permitted to offer its shares to the general public (in particular by trading them on a public stock exchange), and can thereby raise large amounts of capital at low risk. However, many companies register as public companies for the increased status and for the likelihood of an improved credit rating and the consequent ability to borrow money at a lower cost. A private company is a company that is independently owned. ... Capital has a number of related meanings in economics, finance and accounting. ... A credit rating assesses the credit worthiness of an individual, corporation, or even a country. ... Borrow could refer to the verb to borrow (see Debt). ...

Public versus private companies

A public company has several advantages. It is able to raise funds and capital through the sale of its securities. This is the reason why public corporations are so important, historically; prior to their existence, it was very difficult to obtain large amounts of capital for private enterprises. In addition to the ease of raising capital, public companies may issue their securities as compensation for those that provide services to the company, such as their directors, officers and employees. While private companies may also issue their securities as compensation for services, the recipent of those securities often have difficulty selling those securities on the open market. Securities from a public company, typically have an established fair market value at any given time as determined by the price the security is sold for on the stock exchange where the security is traded. Capital has a number of related meanings in economics, finance and accounting. ...

A private company has several advantages. It has no requirement to publicly disclose much, if any financial information; such information could be useful to competitors. For example, Form 10-K is an annual report required by the SEC each year that is a comprehensive summary of a company's performance. Private companies do not file form 10-Ks. It is less pressured to "make the numbers" - to meet quarterly projections for sales and profits, and thus in theory able to make decisions that are best in the long-run. It spends less for certified public accountants and other bureaucratic paperwork required of public companies by government regulations. For example, the Sarbanes-Oxley Act in the United States does not apply to private companies. The wealth and income of the owners remains relatively unknown by the public. A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a public companys performance. ... An annual report is a document which a company presents at its Annual General Meeting for approval by its shareholders. ... Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. In most U.S. states, only CPAs who are licensed are able... The Politics series Politics Portal This box:      This article is about the sociological concept. ... Before the signing ceremony of the Sarbanes-Oxley Act, President George Bush meets with Senator Paul Sarbanes, Secretary of Labor Elaine Chao and other dignitaries in the Blue Room at the White House on July 30, 2002. ...

The norm is for new companies, which are typically small, to be privately owned. After a number of years, if a company has grown significantly and is profitable, or has promising prospects, there is often an initial public offering which converts the private company into a public company or an acquisition of a company by public company. Yet, some companies choose to remain private for a long period of time after maturity into a profitable company. Investment banking firm Goldman Sachs and shipping services provider United Parcel Service (UPS) are examples of profitable companies which remained private company for many years after maturing into profitable companies. An initial public offering (IPO) is the first sale of a corporations common shares to investors on a public stock exchange. ...

Less common, but not unknown, is for a public company to pay cash to its shareholders and become private. This is typically done through a leveraged buyout and occurs when the buyers believe the securities have been undervalued by investors. Public companies can also become private when purchased by a larger company that is private. A leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or bootstrap transaction) occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt. ...

Trading and Valuation

The shares of a public company are often traded on a stock exchange. The value or "size" of a public company is called its market capitalization, a term which is often shortened to "market cap". This is calculated as the number of shares outstanding (as opposed to authorized but not necessarily issued) times the price per share. For example, a company with two million shares outstanding and a price per share of US$40 would have a market capitalization of US$80 million. However, a company's market capitalization should not be confused with the fair market value of the company as a whole since the price per share are influenced by other factors such as the volume of shares traded. Market capitalization, or market cap, is a measurement of corporate or economic size equal to the stock price times the number of shares outstanding of a public company. ... ISO 4217 Code USD User(s) the United States, the British Indian Ocean Territory,[1] the British Virgin Islands, East Timor, Ecuador, El Salvador, the Marshall Islands, Micronesia, Palau, Panama, Turks and Caicos Islands, and the insular areas of the United States Inflation 2. ...

For example, if all shareholders were to simultaneously try to sell their shares in the open market, this would immediately create downward pressure on the price the share is traded for unless there were an equal number of buyers willing to purchase the security at the price the sellers demand. So, sellers would have to either reduce their price or choose not to sell. Thus, the number of trades in a given period of time, commonly referred to as the "volume" is important when determining how well a company's market capitalization reflects true fair market value of the company as a whole. The higher the volume, the more the fair market value of the company is likely to be reflected by its market capitalization.

Another example of the impact of volume on the accuracy of market capitalization is when a company has little or no trading activity and the market price is simply the price at which the most recent trade took place, which could be days or weeks ago. This occurs when there are no buyers willing to purchase the securities at the price being offered by the sellers and there are no sellers willing to sell at the price the buyers are willing to pay. While this is rare when the company is traded on a major stock exchange, it is not uncommon when shares are traded over-the-counter (OTC). Since individual buyers and sellers need to incorporate news about the company into their decisions as to what prices they are willing to accept, a security with few buyers and sellers may have a market price that does not yet reflect the effect of such news, simply because those buyers and sellers are not yet aware of the news or have not yet figured out how it should affect the price. Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, or derivatives directly between two parties. ...

See also

The primary is that part of the capital markets that deals with the issuance of new securities. ... A public benefit corporation is usually a government-owned corporation that performs a specific, narrow function for the public good. ... The initials PLC after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. ... This article is about state ownership. ... Tender offer is a term typically used in corporate finance to mean a public, open offer by an entity to buy stock from the existing stockholders of a publicly traded corporation under specific terms in effect for a specific period. ...


  Results from FactBites:
TH&T | Public Company | Public Company (147 words)
You are an executive or legal counsel of a public company and have an ongoing need for significant support on a variety of fronts from outside counsel.
The attorneys at Testa, Hurwitz and Thibeault, LLP bring a wealth of expertise and practical business advice to your business, including capital raising, strategic alliances, mergers and acquisitions, executive compensation, employee benefits, corporate governance, compliance with federal securities laws, intellectual property protection and disputes and responses to shareholder claims.
We work in an interdisciplinary and collegial fashion to help you efficiently execute transactions and deal with the myriad of regulations you face, with the goal of advancing the interests of your company and its stockholders.
Public Company Search - Doing Company Research: (Business Reference Services, Library of Congress) (1605 words)
Information on public companies is considerably easier to locate than information on privately-held companies.
Company financials, including annual reports, prospectuses or 10k's on over 3,600 public companies are available without charge to the investing public.
Companies frequently allow users to find information about particular plants (especially in manufacturing), properties they own, or other offices/locations (often found in the contact information).
  More results at FactBites »



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