Posted in Finance, Accounting and Economics Terms, Total Reads: 7531
Definition: Widely Held Company
A widely held company or a publicly listed/ traded company is basically a company that has issued securities/ shares through an initial public offering (IPO) in the primary market, has a mandated statutory basic paid up capital, and is traded on at least one stock exchange or in the over the counter (OTC) market. The shares of the company are widely distributed over millions of shareholders (not restricted to just a handful of shareholders, as in privately held companies) and are traded daily over the stock exchanges.
Public companies can sell equity stakes and raise debt from the public with greater ease; which is not the case with privately held companies. However, public companies are mandated, under strict regulatory guidelines, to maintain transparency of operations and decisions, declare financial statements and audit reports regularly and maintain to public shareholders. Also, the rights of majority shareholders stand limited/ diluted in lieu of greater rights being conferred to the public.
Apart from stringent scrutiny from regulatory bodies, public companies must also follow the specific financial and reporting guidelines governed by the respective stock exchange it is listed in.