Public company: A public company is an entity or a company which sell its securities including bonds and stocks to the general public in open market through stock exchange. A large number of investors hold securities of a public company as compare to private company.
Sometimes, government-owned corporations are also termed as public companies, as traditionally they are known to be established for the people and by the people. This concept is very rare in United States.
In United States, public company means a company established in the public sector. The owners or establishers of the company can be national, regional or local government.
As compare to private company, a public company has more stringent filing and accounting procedures to make it accessible to the general public through shares. This helps the company in raising large amounts of capital at low risk.
The percentage of a public owned by a person is represented through the amount of shares he is having. The concept of shares is found in a public company enrolled in stock exchange, in a company which is not enrolled, and in derivatives including warrants, right issues, and options and futures.
The valuation of shares is done by the multiplying the number of shares, owned by a person, to the last sale price of the share. The last sale price list brought fortnightly to the database regularly.
Market capitalization or market cap is a term that is used to represent the size of the company, depending on the amount of shares owned by the shareholders.
Shareholders or stockholders of a public company are the owners of one or more shares and mutual funds of the company. In the parameters of their ownership rights they can claim on undivided assets of a company depending on the number of shares they have. They have the power to vote or elect Directors and other business of a company. They can claim their share on dividends declared by the Board of Directors. Lastly, they can subscribe for additional stock before they get available for general public.
Directors and officers of the company are bound to act in interest of their shareholders, whereas shareholders don't have such compulsions.
Usually, in a public company an annual meeting is conducted for all shareholders to elect Board of Directors and to discuss the economic condition of the company.