Define: Public Company

A public company is a corporation that has issued securities through an initial public offering (IPO) and is traded on a stock exchange.

To go public, a company must comply with various legal and regulatory requirements, including filing a registration statement with the Securities and Exchange Commission (SEC) and meeting financial reporting and disclosure obligations.

Some advantages of being a public company include access to capital through the sale of securities, increased liquidity for shareholders, and enhanced credibility and visibility in the marketplace.

Disadvantages of being a public company may include increased regulatory and compliance requirements, potential loss of control for existing shareholders, and the need to disclose sensitive information to the public.

The board of directors of a public company has a fiduciary duty to act in the best interests of the company and its shareholders, including overseeing management, setting strategic direction, and ensuring compliance with legal and ethical standards.

Public companies are required to disclose material information to the public, including financial statements, executive compensation, related party transactions, and other significant events that may impact the company’s stock price.

Legal risks for public companies may include securities fraud, insider trading, shareholder lawsuits, regulatory investigations, and compliance violations.

Public companies can raise capital through the sale of common stock, preferred stock, debt securities, and other financial instruments in the public markets.

Insider trading rules prohibit company insiders from trading securities based on material non-public information, and require the timely disclosure of their trades to the SEC.

Public companies must file periodic reports with the SEC, including annual reports (Form 10-K), quarterly reports (Form 10-Q), and current reports (Form 8-K), as well as proxy statements and other disclosures.