Lesson 5 of 6 · All lessons in this module
Lesson 5 of 6 · 13 min
Publicly versus privately owned corporate issuers
A public (listed) issuer has shares that trade on an exchange, giving liquidity, visible prices and easy access to new capital in exchange for heavy disclosure; a private issuer trades that liquidity for control, fewer stakeholders and lower costs.
In short
- For issuers, public/private (or listed/unlisted) means whether the shares trade on an exchange. This is different from the legal form 'public limited company', which need not be listed.
- An exchange is a rules-based, open venue with transparent prices and volumes. Listing gives liquidity and price transparency.
- Free float = shares freely available to trade (not held by insiders, strategic investors or sponsors), usually given as a % of shares outstanding.
- Public issuers can issue new shares that trade straight away; private issuers raise smaller amounts through private placements, often limited to accredited (sophisticated) investors.
- Public companies must register and make extensive financial and non-financial disclosures; private companies have far fewer requirements.
- Private status offers fewer stakeholders, exposure to early-stage growth and lower disclosure and financing costs, but shares are illiquid and often locked up until a sale or listing.
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