Public companies sell shares on the market. Buyers of these shares become shareholders. A company goes public through an initial public offering (IPO) to raise funds. Public companies must conduct an annual general meeting (AGM) for shareholders to vote on board members and company decisions. Shareholders also receive a portion of the company's profits.
Understanding Public Companies
Public companies offer shares to the public through an IPO. This is a method for private companies to raise funds by offering shares to investors on a stock exchange. Public companies must adhere to the rules of the stock exchange it is listed on. While a public company has access to more funds, it must disclose more information and is subject to more scrutiny. Examples of public companies include Tata Motors, ITC, Wipro, and Bharti Airtel.
Most public companies used to be private companies, owned by a select group such as founders or investors. Private companies do not sell shares on a stock exchange and do not need to register with the stock exchange. They have control over their decisions but rely on private sources of funding, like bank loans or venture capital.