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Publicly Held Corporations

A corporation is an institution that is recognized as a separate legal entity with detached accountability.  It has its own rights, privileges, and liabilities distinct from those of its members or individual owners.  There are different types of corporations, most of which are used to conduct business.

The establishment most often referred by the word corporation is a publicly held corporation.  A publicly held corporation is a publicly traded corporation.  The shares of such corporations are traded on a public stock exchange (e.g., the New York Stock Exchange or NASDAQ in the United States).  The shares of stock of publicly held corporations are bought and sold by and to the general public at the public stock exchanges.  Although, a publicly held corporation is dependant on the market, publicly traded companies generally have more working capital and can delegate debt throughout all shareholders.  This means that people invested in a publicly traded company will each take a much smaller risk to their own capital as opposed to those involved with a closely held corporation.

The affairs of publicly held and closely held corporations are similar in many respects.  However, the main difference is that, publicly held corporations have the burden of complying with additional securities laws, and may require additional periodic disclosure, stricter corporate governance standards, and additional procedural obligations in connection with major corporate transactions such as mergers, acquisitions or elections of directors than a closely held corporation.

Inside Publicly Held Corporations