[Read Installment #3 here. Read Installment # 5 here]
You probably already invest in public companies If you have a:
You most likely already are an investor (albeit indirectly).
To be clear, this would make you an indirect investor in public companies since your investments in any of the above usually take the money you invest, pool it with the money of other investors, and then invest that money in various assets, including (and in some cases only) public companies.
I answer this question in Installment #1 in a different way and you should read it for a complete understanding. With that in mind, the SEC considers a company to be a ‘public’ company if that company has public reporting obligations. A company is subject to public reporting requirements if it does any of the following:
A private company can become subject to public reporting requirements by merging with a public shell company. This process is called a reverse merger.
As mentioned, the SEC views a company as public if it is subject to public reporting obligations. There are instances, however, where the securities of a company that does not regularly report business and financial information to the public are nonetheless traded on smaller public markets. These companies trade on the “Grey Market,” as I use the term in Installment #1, any investing in them is riskier because there can be little public information to allow investors to make an informed investment decision about them.
Federal securities laws are based on public disclosure by companies of meaningful business, financial, and other information.
A public company’s disclosure obligations begin with the initial registration statement that it files with the SEC. But the disclosure requirements don’t end there. Public companies must continue to keep their shareholders informed on a regular basis by filing periodic reports and other materials with the SEC. The SEC makes these documents publicly available without charge on its EDGAR website. The filed documents are subject to review by SEC staff for compliance with federal securities laws.
Following are some of the reports that may be filed by U.S.-based public companies. Foreign companies that file reports with the SEC may file different types of reports:
Jonathan Friedland is not an investment advisor. He holds no relevant licenses, nor does he have formal education in the area of investing. He is, however, an avid and reasonably successful investor in both private and public companies who has few other hobbies, a day job that has forced him to learn some of the same skillsets that some financial advisors have, and who is passionate about financial literacy. This article, like all articles published by Financial Poise, is subject to these legal disclaimers. This series draws in part on information that is publicly available at investor.gov and other websites owned by the U.S. federal government.
©2022. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
Jonathan Friedland is a principal at Much Shelist. He is ranked AV® Preeminent™ by Martindale.com, has been repeatedly recognized as a “SuperLawyer”, by Leading Lawyers Magazine, is rated 10/10 by AVVO, and has received numerous other accolades. He has been profiled, interviewed, and/or quoted in publications such as Buyouts Magazine; Smart Business Magazine; The M&A…
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