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Privately and publicly held companies - features - Coggle Diagram
Privately and publicly held companies - features
Shareholders own but not run business.
Purchase of share provide finance, but have little input into running, instead professionals managers are employed to make management decisions.
Business and owners are legally separated entities.
Shareholders aren't liable for debts, being legally distinct, owners can change. Who owns shares can dell them.
Details of company's formation are legally recorded and are matters of public records.
Owners must have 2 documents drawn up and register appropriate to government agency...
Memorandum of association.
Records characteristics and external activities of the company.
Article of association.
Specifies how the company will be regulated internally.
Greater finance is generally available.
Initial offerings of shares represent injection of capital, when shares are sell they receive price paid at IPO.
Initial shares and gains/losses in price are benefits of shareholders, unless it has issues.
Held to high degree of accountability.
As they are separate entities, so company provide information to shareholders to understand the condition of investment.
Information provided by...
Published, audoted annual reports (in some countries, unaudited quarterly reports).
Annual general meeting (AGM).
Extraordinary general meeting (EGM).
Greater stability and higher chance of continuity.
When shareholder dies, company continues. Partial owner is replaced by another, it can last forever as it is independent.