Publicly Held Corporation

A publicly held corporation is a type of business entity whose shares of common stock are offered to the general public and traded on a national stock exchange.
On this page

Definition

A publicly held corporation, also known as a public corporation, is a type of business organization whose shares of common stock are available for purchase by the general public on a national stock exchange, such as the New York Stock Exchange (NYSE) or NASDAQ. These companies are required to comply with strict regulatory and reporting requirements set forth by the Securities and Exchange Commission (SEC) to provide transparency and protect investors.

Publicly held corporations are characterized by their ability to raise capital by issuing shares to the public, which can help fund expansion, research and development, and other business operations. Ownership of these companies is distributed among numerous shareholders, making it easier for the entity to accumulate substantial capital.

Examples

  1. Apple Inc.: Apple is one of the most well-known publicly held corporations listed on NASDAQ. It sells shares of its common stock to the public, allowing anyone to invest in its business.

  2. Microsoft Corporation: Another major publicly held corporation, Microsoft is listed on the NASDAQ exchange and has multiple classes of stock available for public trading.

  3. Coca-Cola Company: Coca-Cola is listed on the New York Stock Exchange (NYSE) and offers its shares for trading to the general public.

Frequently Asked Questions

Q1: What are the advantages of a publicly held corporation?

A1: The advantages include access to more capital through public markets, increased public awareness, and liquidity for shareholders.

Q2: What are the regulatory requirements for publicly held corporations?

A2: Publicly held corporations must adhere to the SEC’s regulations, including regular financial reporting, corporate governance standards, and disclosure of material events.

Q3: How can one buy shares of a publicly held corporation?

A3: Shares can be purchased through brokerage firms on stock exchanges where the corporation is listed.

Q4: What is the role of the board of directors in a publicly held corporation?

A4: The board of directors governs the corporation, makes major decisions, and oversees management to protect shareholders’ interests.

Q5: Can publicly held corporations become privately held again?

A5: Yes, through a process called “going private,” where private investors buy out public shareholders, thus delisting from public exchanges.

  • Initial Public Offering (IPO): The first sale of stock by a company to the public.
  • Stock Exchange: A marketplace where securities are bought and sold.
  • Shareholder: An individual or entity that owns shares of a corporation.
  • Securities and Exchange Commission (SEC): The regulatory body responsible for overseeing the securities markets in the U.S.
  • Market Capitalization: The total market value of a company’s outstanding shares of stock.

Online References

Suggested Books for Further Studies

  • “The Public Company Handbook: A Corporate Governance and Disclosure Guide for Directors and Executives” by Douglas R. Raymond and William R. Kucera
  • “Public Company Reporter” by Wolters Kluwer Editorial Staff
  • “Investor Relations for the Emerging Company” by Ralph A. Walkling, Jeff J. Marek, and Laura T. Starks

Fundamentals of Publicly Held Corporation: Business Law Basics Quiz

Loading quiz…

Thank you for engaging in our comprehensive exploration of Publicly Held Corporations and testing your knowledge through our sample quiz questions. Continue to expand your business acumen!

Publicly Traded Corporation
Publicity Costs