What Is a Public Company?

What Is a Public Company?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

A public company, also commonly referred to as publicly traded or publicly held, is a company that has issued securities through an initial public offering (IPO). With the capability to sell its shares to the public while being traded on at least one stock exchange or over-the-counter market, this results in the company’s ownership being disseminated amongst public stockholders. This permits the public, rather than just the company’s co-founders or private investors, to invest in, buy, sell, or even hold the company’s shares.

Related Questions

1. What is a Private Company?

A private company is a firm held under private ownership. Its shares are not available to the general public and cannot be traded on a public stock exchange. Ownership in a private company is typically offered to employees, managers, or a select group of investors.

2. What is an Initial Public Offering (IPO)?

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An Initial Public Offering (IPO) is the process by which a private company becomes public. In an IPO, a company sells a portion of its equity, in the form of shares, to public investors for the first time.

3. How Do Public Companies Raise Capital?

Public companies raise capital primarily through selling equity (shares) and debt (bonds) on the open market. They also generate capital by retaining earnings, issuing new shares, or by reducing costs.

4. What is a Stock Exchange?

A stock exchange is a regulated marketplace where buyers and sellers can transact in shares, bonds, and other securities. It provides a platform for the issuance and trading of these financial instruments.

5. What is a Public Stockholder?

A public stockholder is an individual, entity, or financial institution that owns shares in a publicly traded company. They have the right to vote on company decisions and might receive dividends, which are a portion of the company’s profits distributed to shareholders.