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Understanding the benefits of publicly-held corporations

On Behalf of | Dec 7, 2018 | Business Organizations |

Many companies in the state of Utah decide to keep their shares private between owners, and there are many potential benefits to this. These companies are often referred to as closely held companies.

Other companies, however, come to the conclusion that it will be beneficial for them to open up their company in order to make it possible for public individuals to purchase shares. This can increase the potential for external investment; however, it also means that the company will be subject to very stringent requirements when it comes to reporting. This is to ensure that public buyers are not misled or coerced by inaccurate information.

If you own a company in the state of Utah, it is important that you understand the benefits and drawbacks of both closely held and publicly held corporations in order to decide what solution could work best for you, and what advantages could come with going public.

Why might a company decide to go public?

Many small companies decide to become a publicly held company because they see opportunity for growth. The main advantage is the fact that opening up shares on the international stock market is a great way to raise capital quickly. This can help an otherwise stagnant company to invest in further research and business development.

However, there are some disadvantages. The Securities Exchange Act of 1934 puts a high amount of pressure on publicly held companies to ensure that they report their accounts comprehensively.

If you are considering making your company public, it is important that you look into all the possible eventualities before making a commitment.