Publicly Traded Companies

In: Business and Management

Submitted By nicole23
Words 2265
Pages 10
Features of a publicly traded company

A publicly traded company, in essence, is a company that that trades its stocks in the public market. Examples of the public market are the stock exchange and over the counter market. A publicly traded company is also known as a public company. In a public company, the shares and stocks are not limited to a particular group of people; the stocks can be bought by anyone from the public. A public company is however required to have a minimum of two directors and an unlimited number of shareholders; in addition, this company should have a minimum share capital. Such companies can easily raise more capital when compared to private companies since they can legally offer liquidity to the shareholders. These companies, nevertheless, have to abide to strict Securities Exchange Commission regulations and have to give clear and accurate data to the investors.

Publicly traded companies also have to provide all information to the public without bias be issuing their prospectus the number of times the law requires them to. A public company is also its own legal entity meaning that the company and the owners are legally two separate things. Therefore, the company’s existence does not depend on the owners or directors. In these types of companies, the people with the highest number of shares and stocks are the ones who have the most say in deciding the company’s policies. These policies are generated at least once a year in their annual general meeting. One good thing about public companies is that it has limited liability; therefore, in the case of losses or erroneous activities, it is the firm and not the shareholders that will be held responsible of its actions. The shareholders do not run the company in essence; however, the major shareholders meet regularly and choose the managerial staff that will run the company. The management…...

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