Public Company

A company becomes public, usually through an initial public offering, when it sells shares to outside investors and lists them on an exchange. After that, anyone with a brokerage account can buy its shares.

Being public has advantages. The company can raise large amounts of money by issuing shares or bonds, its shares can be used to pay for acquisitions or reward employees, and shareholders can easily sell their stakes. It also often raises the company's profile.

There are significant responsibilities. Public companies must publish audited financial statements and other important information regularly, follow strict rules on disclosure and governance and respond to shareholders, who can vote on major issues. They face pressure from investors and analysts to deliver results every quarter.

For example, a public company must announce material news, such as a large contract loss, promptly so that all investors have access to the same information.

In some countries, "public company" can also mean a company eligible to offer shares to the public even if they are not listed. The term should not be confused with a government-owned company.