Public Companies Write For Us
What are Public Companies?
It is a company that sells all or a portion of itself to the public thru an initial public offering. The main benefit public companies have is their facility to tap the financial markets by selling stock (impartiality) or bonds (debt) to raise capital (i.e., cash) for growth and other projects.
A certain percentage of the shares are for the public, but generally, the controlling stake resides with the majority shareholder. Going public means, the secondary market can determine the entire company’s value through trading between investors.
Structure for Registration of a Public Limited Company
The format for registration of a public limited company has four steps, they are;
- 1 Step: Digital Signature Certificate (DSC)
- 2 Step: Director Identification Number (DIN)
- 3 Step : Registration on the MCA Portal
- 4 Step : Certificate of Incorporation
Who Owns A Public Company?
Ownership of a public company is distributed among general public shareholders through the free trade of shares of stock on stock exchanges or over-the-counter (OTC) markets.
Advantages of Public Companies
1. Ability to increase funds by selling stock
The first advantage that public companies enjoy is the aptitude to increase funds by selling the company’s stock to the public. However, before becoming public, it isn’t easy to gain large amounts of capital, other than through borrowing, to finance acts and new product offerings.
A private thing can only get financing by taking out a loan, reinvesting its profits, or getting investments from wealthy individuals who may not offer adequate capital to meet the company’s financial needs.
2. Availability of financial information
The companies must file quarterly and annual financial reports and other compulsory documents with the SEC. The requirement allows shareholders, financial media, interested investors, and financial analysts access additional information about the company.
Disadvantages of Public Companies
1. Increased government and regulatory scrutiny
These companies are vulnerable to increased scrutiny from the government, regulatory agencies, and the people. The company must meet various mandatory reporting standards set by government entities such as the SEC and the IRS.
2. Strict adherence to global accounting standards
They must also prepare their financial reports per the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). Shareholders are also entitled to crucial documents on the company’s business activities.
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