Skip to main content

Being a public company - what it means?



In simple term public company is company whose shares are publicly traded on one or more stock exchanges or over the counter market (OTC) and that ownership is dispersed among the many investors. History of public market dates back in early modern period when Dutch helped lay foundation of modern financial system. Publicly traded companies usually have many investor while privately held companies had fewer, but company with big number of investor doesn't have to be public company. Securities and Exchange Commission (SEC) states that every company with more than 500 investors and more than $10 million in assets must register with SEC and adhere to its regulations. Most public companies where private and after that they meet requirements to become publicly traded company mainly because it brings many advantages.

Public companies are able to raise capital  through the sale of stock in a way shares become company's currency which is then traded on the market. Before it was difficult to obtain larger sums of capital. It was only possible through wealthy investors and banks willing to take the risk. Investors can profit from stocks dividends - payment made by corporation to its shareholders, usually as a distribution of profits. Once that company goes public it can generate new revenue through sale of new shares (secondary offering).

When a company is public it is under a lot of scrutiny, having to meet all the needed requirements and regulations.Those requirements include disclosure of financial statements and annual reports that truthfully represent the state of the company. SEC requires hat public companies report to their major shareholders each year, including institutional shareholders, company's officials who own shares and any other investors that own more than 5% of shares. Many stock exchanges require from companies to have their accounts regularly audited by an outside auditor. this requirement for audited financial is not imposed by OTC Pink. What this means is that more information is available to the public in order to help investors deciding whether to add particular stock in their portfolio.

Being a publicly traded company can have a certain amount of prestige, especially if your stock are traded on one the big exchanges like The New York Stock Exchange (NYSE) and NASDAQ. Public companies with many  shareholders tend to be more recognizable to public than private companies. Initial public offerings are, especially of big companies are  usually covered in media, creating a buzz of excitement and attracting more potential investors. It is a way for initial shareholders to share the risk or provide an exit strategy while increasing assets liquidity and avoiding bank debt. Giving shares of your company to the management and employees is a good incentive program that will inspire them to work harder and ensure company's success.

Mina Mar Group will assist you every step of the way through the complex maze of public market and help your reach your business objectives. If you seek an exit strategy, additional funds, professional consulting and assistance in going public and communication with investors don't hesitate to contact us - MinaMarGroup.com
Labels:
Location: West Palm Beach, FL, USA

Comments

Post a Comment

Popular posts from this blog

OTC stocks more difficult to trade and deposit

  Mina Mar Group helps micro-cap companies structure their growth. Micro-capitalized companies are those with less than $50,000,000 in equity, sometimes under $1,000,000. Restructuring involves raising money (both debt and stock), and planning how they will eventually harvest that wealth. If you’re a founder or investor, the secret to harvesting your equity is to possess assets with a developed market for their sale; up until recently, that market was the public market. Now, Over-The-Counter Securities (“OTC Securities”) don’t serve that purpose since, unless you’re a tech unicorn doing an IPO, there are essentially no ways to sell the shares you’ve invested in. OTC securities – how they were deposited five years ago. Brokerages all around the country have tightened compliance over the past five years to the point where no one may deposit share certificates into their brokerage accounts, even if they can prove that they paid for them. Consider the following demand from a secondary ...
Post a Comment
Read more

Understanding financial statement

The financial statement is a written record of financial activities that gives an overview of financials results and conditions. Financial statement has three basic components: balance sheet which is an overview of assets, liabilities and equity on a particular date, income statement shows net income of the company during a set period of time and cash flow statement which shows inflow and outflow of cash caused by company's activities during stated period of time. Financial statements are often audited to ensure accuracy for tax, financing and investing purposes. Balance sheet reports your net worth at a particular point in time; you can understand it as snapshot in time, usually at the end of the fiscal year. It summarizes all financial data in three categories, assets, liabilities and equity. Assets are tangible objects of financial value owned by the company. Liability is debt owed to a creditor and Equity is a net difference when total liabilities ...
Post a Comment
Read more

The Bad Actor rule of Regulation D

On July 10, 2013 the Securities and Exchange Commission adopted bad actor disqualification provision for Rule 506 of Regulation D under Securities Act of 1933, to implement Section 926 of Dodd-Frank Wall Street Reform and Consumer Protection Act. The disqualification and related disclosure provision appear as paragraphs (d) and (e) of Rule 506, of Regulation D. The Bad Actor rule prohibits company (the issuer) to use registration exemption if the issuer or any other associated person has been convicted of or subjected to judicial or regulatory sanctions for certain violation of U.S law. Exemption from registration under Regulation D helps thousand of businesses to raise capital worth billions of dollars. T he “Bad Actor” rule is codified as new paragraphs (d) and (e) to Rule 506.  Rule 506(d) provides that the exemptions in Rule 506(b) and Rule 506(c) are not available if the issuer or any associated person is statutorily disqualified. This includes all of the following: ...
Post a Comment
Read more