A public unlisted company is a type of company that issues shares to the public but is not listed on any stock exchange. This means that its shares cannot be traded on a public stock exchange, but can be bought and sold privately between investors. Public unlisted companies are typically smaller than listed companies and may have fewer shareholders.
What is meant by public unlisted company
They may choose to remain unlisted for various reasons, such as avoiding the costs and regulatory requirements of listing, maintaining control over the company, or keeping financial information confidential. Despite not being listed, they still need to comply with various legal and regulatory requirements, including disclosing financial information to shareholders.
benefits of unlisted public company
public unlisted companies can enjoy several benefits compared to their listed counterparts.
- They can maintain greater control over the company and decision-making processes since they are not subject to the demands and scrutiny of public shareholders.
- They can avoid the costs and regulatory requirements associated with listing on a stock exchange, such as listing fees and ongoing reporting obligations. This can result in lower operating costs and greater flexibility in terms of strategic decision-making.
- Being unlisted can allow for greater privacy and confidentiality in financial matters, as they are not required to disclose as much information to the public.
public unlisted company vs private company
public unlisted company
Public unlisted companies issue shares to the public but are not listed on a stock exchange. They are subject to regulatory and legal requirements but have fewer shareholders and can maintain greater control over the company’s decision-making. They can also avoid the costs and requirements of listing on an exchange, but may have limited liquidity for their shares.
private company
Private companies are not publicly traded and do not issue shares to the public. They have more flexibility in terms of ownership and decision-making, but have limited access to capital markets and may find it more difficult to raise funds. They also have greater privacy and confidentiality in financial matters.
unlisted public company companies act, 2013
The Companies Act, 2013 recognizes the concept of an public unlisted company in India. An public unlisted company is defined as a company that is not listed on any recognized stock exchange, but has more than 200 shareholders and is not a private company.
Under the Act, unlisted public companies are subject to various regulatory and compliance requirements, including the appointment of independent directors, holding of annual general meetings, maintenance of proper books of accounts, and disclosure of financial statements.
In addition, unlisted public companies are required to comply with the provisions of the Securities and Exchange Board of India (SEBI) regulations related to public issues and listing of securities. They may also be subject to periodic inspections by the Registrar of Companies to ensure compliance with these regulations.
Are unlisted companies public?
Yes, unlisted companies can be public companies. A public company is defined as a company that has issued shares to the public and is not a private company.
Unlisted public companies issue shares to the public, but their shares are not traded on a stock exchange. Instead, they may be bought and sold privately between investors. These companies are subject to various regulatory and compliance requirements, including those under the Companies Act and the SEBI regulations related to public issues and listing of securities.
On the other hand, a private company does not issue shares to the public and is not allowed to have more than 200 shareholders. Private companies have more flexibility in terms of ownership and decision-making, but have limited access to capital markets and are subject to fewer regulatory and compliance requirements than public companies. Private companies are not subject to the same level of regulatory requirements as public companies and may have more flexibility in terms of ownership, management, and decision-making.
Can unlisted company bring IPO?
Yes, an unlisted company can bring an Initial Public Offering (IPO) and become a listed company on a stock exchange. An IPO is a process through which a company offers its shares to the public for the first time and becomes listed on a stock exchange.
To bring an IPO, the unlisted company needs to comply with various regulatory requirements and guidelines set by the Securities and Exchange Board of India (SEBI). These requirements include appointing lead managers, filing a draft prospectus, complying with disclosure norms, and obtaining necessary approvals from regulatory authorities.
Bringing an IPO can be a significant step for an unlisted company as it can help raise funds for expansion and provide liquidity to existing shareholders. It can also increase the company’s visibility and reputation in the market, potentially leading to increased business opportunities and partnerships.
What is the difference between listed public and unlisted public company?
Key Differences Between Listed And Unlisted Companies
| Point of difference | Listed companies | Unlisted companies |
| Ownership | Usually owned by several shareholders. | Usually owned by a few private investors. |
| Liquidity of securities | Higher | Lower |
| Regulatory requirements | Need to comply with strict guidelines of regulators, such as SEBI. | May have relatively lesser guidelines to follow. |
| Volatility | Higher volatility | Relatively lower volatility |
| Valuations of securities | Arriving at the market value of securities is easier due to the availability of stock prices. | Arriving at the exact market value is quite challenging. Instead, estimated market value is used. |
| Trading | Securities are traded over stock exchanges. | Securities are traded in the over-the-counter market. |
| Risks & returns | Relatively lower risk and lesser chances for exceptional returns. | Relatively higher risk, though more chances for exceptional returns. |
example of listed, unlisted company and private company
An example of a listed company is Reliance Industries Limited, which is listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. It is a publicly traded company, and its shares are available for purchase by the general public.
An example of an public unlisted company is Paytm Payments Bank, which is not listed on any stock exchange but has more than 200 shareholders and is not a private company. Its shares cannot be traded on a public market, but can be bought and sold privately between investors.
An example of a private company is Infosys Consulting Private Limited, which is not publicly traded and does not issue shares to the general public. It is owned by a small group of shareholders and is not subject to the same level of regulatory requirements as public companies.
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Final Thoughts
Understanding the differences between listed and unlisted companies is important for investors, regulators, and companies themselves. While both types of companies have their advantages and disadvantages, their regulatory requirements, ownership structures, and access to capital markets can vary significantly. It is important to consider these factors when making investment decisions or evaluating a company’s financial health.