Quoted Company: Definition and Overview
A quoted company (or listed company) is a business entity whose shares are available for trading on a public stock exchange. Being quoted means that the company’s shares can be bought and sold by the general public, and its operations and financial performance are subject to strict regulatory scrutiny and transparency requirements.
Regulatory and Transparency Requirements
Quoted companies must adhere to regulations set by governing bodies like the Securities and Exchange Commission (SEC) in the United States or the Financial Conduct Authority (FCA) in the United Kingdom. These rules are designed to ensure transparency, protect investors, and maintain fair trading practices. This includes the disclosure of financial statements, corporate governance practices, and any material events that could influence the company’s stock price.
Key Features
- Public Trading: Shares are publicly traded on stock exchanges such as the New York Stock Exchange (NYSE), NASDAQ, or the London Stock Exchange (LSE).
- Regulatory Compliance: They must comply with stringent reporting and disclosure requirements.
- Market Capitalization: The value is determined by the stock price multiplied by the number of outstanding shares.
- Corporate Governance: High standards of governance and accountability are required.
Examples
- Apple Inc. (NASDAQ: AAPL): As a quoted company on NASDAQ, Apple Inc. is subject to SEC regulations and must publicly disclose its financial health, operations, and strategies.
- Unilever PLC (LSE: ULVR): Listed on the London Stock Exchange, Unilever must comply with FCA rules and regularly disclose its performance and governance practices.
- Toyota Motor Corporation (NYSE: TM): Quoted on the New York Stock Exchange, Toyota adheres to SEC regulations and provides transparent financial reporting.
Frequently Asked Questions
What is the difference between a quoted company and a private company?
Quoted companies have shares traded on a public stock exchange and must comply with extensive disclosure and regulatory requirements. Private companies, on the other hand, do not trade shares publicly and have fewer regulations to adhere to.
How does a company become quoted?
A company becomes quoted by undergoing an Initial Public Offering (IPO), where its shares are offered to the public for the first time. Post-IPO, its shares are traded on a stock exchange.
Why is transparency important for quoted companies?
Transparency is crucial to maintain investor trust and ensure an efficient market environment. It ensures that all investors have access to the same information, which is essential for fair trading.
Can a quoted company become private again?
Yes, a quoted company can become private through a process called delisting. This typically happens when a company is acquired, or it decides to buy back all its public shares.
Related Terms with Definitions
- Initial Public Offering (IPO): The process by which a private company goes public by offering its shares to the public for the first time.
- Market Capitalization: The total market value of a company’s outstanding shares, calculated by multiplying the current share price by the total number of shares.
- Securities and Exchange Commission (SEC): A U.S. government agency responsible for enforcing federal securities laws and regulating the securities industry.
- Financial Conduct Authority (FCA): A regulatory body in the UK overseeing the conduct of financial firms and the integrity of the financial markets.
Online References
- Securities and Exchange Commission (SEC)
- Financial Conduct Authority (FCA)
- New York Stock Exchange (NYSE)
- London Stock Exchange (LSE)
Suggested Books for Further Studies
- “The Intelligent Investor” by Benjamin Graham
- “Common Stocks and Uncommon Profits” by Philip Fisher
- “Security Analysis” by Benjamin Graham and David Dodd
- “Corporate Finance” by Stephen A. Ross, Randolph W. Westerfield, and Jeffrey F. Jaffe
- “Principles of Corporate Finance” by Richard Brealey, Stewart Myers, and Franklin Allen
Accounting Basics: Quoted Company Fundamentals Quiz
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