A listed company issues shares of its stock for trading on a stock exchange. In the U.S., a company must meet the proprietary requirements set forth by the Securities and Exchange Commission (SEC) to sell shares to the public. Accepted companies, such as those on the New York Stock Exchange (NYSE), become public companies.
Key Takeaways That Define Listed Companies
- A listed company issues stock shares to the public through a recognized stock exchange — for immediate buying and selling through that exchange.
- Listed companies must adhere strictly to the rules of both the respective exchange and the governing regulations of the SEC.
- A company can face delisting for failing to meet exchange rules or undergoing a merger with another company or private investors.
- Companies failing an exchange’s standards might resort to offering stock through the over-the-counter market.
The True Definition of a Listed Company
A listed company is a public entity that extends its share offerings through an exchange. Investing public participants can freely buy and sell these shares, whose value fluctuates with demand. Listing requirements include minimum thresholds of both cash flow and assets alongside strict adherence to corporate governance principles.
As public entities, listed companies fall under SEC mandates, including continuous submission of quarterly and annual financial reports.
Elevating a Company’s Status Through Listing
Listings provide companies a substantial advantage to expedite the cash-raising process through the open stock market. Companies aiming for expansion generally have world-class funding options:
- Taking loans with interest paybacks
- Attracting private, sizable investors with equity demands
- Going public and raising money through stock sales
Listed companies benefit big-time by various means beyond access to rich funds. Visibility spikes, highlighting them to investors and the maturing financial media. Additionally, stock options reward employees.
These practices benefit investors, assuring them the transparency and accountability ensured through SEC and stock exchange regulations while allowing abundant liquidity and straightforward investor engagement.
The Attraction of Initial Public Offering (IPO)
Many budding companies earmark
Related Terms: Initial Public Offering, Delisting, Securities and Exchange Commission, Over-the-Counter.
References
- Securities and Exchange Commission. “The Laws that Govern the Securities Industry”.
- Statista. “Top 20 largest private U.S. companies in 2019, by revenue”.
- Nasdaq. “Nasdaq Initial Listing Guide”.
- NYSE. “Overview of NYSE Quantitative Initial Listing Standards”.
- Yahoo! Finance. “Sears Holding Corporation (SHLDQ)”.
- Yahoo! Finance. “Dell Technologies Inc. (DELL)”.
- Dell Computers. “Michael Dell and Silver Lake Complete Acquisition of Dell.”
