Legal Definitions - public corporation

A public corporation is a type of company whose ownership is divided into shares that can be bought and sold by the general public on a stock exchange, such as the Nasdaq or the London Stock Exchange. Unlike a private company, which has restricted ownership, a public corporation makes its shares available to any investor.

To become a public corporation, a company typically undergoes an Initial Public Offering (IPO), a process where its shares are offered to the public for the first time. Once public, these corporations are subject to strict regulations by government bodies (like the Securities and Exchange Commission in the U.S.). These regulations require them to regularly disclose detailed financial information, including annual and quarterly reports, to ensure transparency for their investors and the market.

Here are some examples to illustrate what a public corporation is:

• Individual Investment: Imagine a person named David who wants to invest his savings. He decides to purchase shares of "Aurora Innovations Inc." through his online brokerage account. He can easily find information about Aurora Innovations Inc.'s stock price, financial performance, and company news because it is widely reported and accessible.

  This illustrates that Aurora Innovations Inc. is a public corporation because its shares are listed on a public stock exchange, making them available for anyone, like David, to buy and sell. The public availability of its shares is a defining characteristic.

• Quarterly Earnings Report: "Global Logistics Solutions Corp." recently announced its earnings for the last quarter. This announcement included detailed figures on its revenue, profits, and future projections, which were published on its investor relations website and covered by major financial news outlets.

  This demonstrates that Global Logistics Solutions Corp. is a public corporation because it is legally obligated to regularly release comprehensive financial reports to the public. This transparency allows current and potential investors to assess the company's performance and make informed decisions, a key requirement for companies trading on public markets.

• Funding Expansion: "TerraForm Energy Inc." plans to build several new solar power farms across the country. To fund this ambitious expansion, the company decides to issue new shares to the public on the stock market, allowing a broad base of investors to contribute capital in exchange for a stake in the company.

  This highlights that TerraForm Energy Inc. is a public corporation because it can raise significant capital by selling ownership shares to the general investment community. This ability to tap into a wide pool of public investors for funding is a primary advantage and characteristic of being a public corporation.