What Is a Publicly Held Organization?

by Gail Sessoms, Demand Media
Publicly held companies are traded on the stock exchange.

Publicly held companies are traded on the stock exchange.

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A publicly held, or publicly traded, organization offers its securities for sale to the general public and trades it stock on a stock exchange. Securities include stock in the company or shares of the company. The U.S. Securities and Exchange Commission enforces federal laws concerning publicly traded companies and the stock exchange. Publicly held organizations exchange a large degree of autonomy for increased access to capital and other financial advantages.


Companies often opt for public trading because of increased need for capital. Companies become larger or have plans for expansion or high-cost projects. Becoming a publicly traded company affords access to a larger and more diverse pool of investors, some of whom offer significant infusions of cash. Owners of private companies that go public might be suddenly wealthy since the value of the company on the stock exchange determines the value of stock the owners hold. Stern Business School at New York University cites the example of Netscape, which went public with a value of $2.1 billion making the two co-founders’ shares worth $565 million and $58.25 million. Some of the stock exchanges are the American Stock Exchange, New York Stock Exchange and NASDAQ , which is operated by the National Association of Securities Dealers.

Private vs. Public

A private company does not sell its stock to the public or trade its stock on the exchange. Stockholders in private companies often include the founder, family members and employees. Privately held companies do not have access to the external financing available to publicly traded companies. Attracting investors to supply capital is often more difficult, but the owners of private companies have more control over the company, more privacy and fewer regulations. Private companies must meet requirements for public trading, which include the minimum number of stockholders and value of assets. The founders of publicly traded companies eventually see a devaluing of their company shares and also are subject to the shareholders’ control of the company, which could include removal of the founders.

Initial Public Offering

The initial public offering, or IPO, is the first time a company sells shares to the general public. A company that intends to make a public offering hires an investment banker to manage the process, sets the price for its stocks and files a prospectus and a registration statement with the SEC. The prospectus provides information about the value of the company, its financial history, forecasts for its future and how it plans to use the money raised from the initial public offering. The company may not sell shares or other securities until the SEC approves its filings.

U.S. Securities and Exchange Commission

Federal law requires publicly traded companies to make certain information available to the public. The U.S. Securities and Exchange Commission, or SEC, enforces these laws to help the public make informed investment decisions. The SEC monitors the activities of the companies being publicly traded, stock exchanges and the advisors, brokers and others involved in securities. Publicly traded companies are required to provide truthful information about the value of the companies, the securities being sold and the investment risks. The Securities Exchange Act of 1934 requires publicly traded companies to submit periodic reports, including the annual 10-K report, to the SEC disclosing information about the company’s finances and operations.

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