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A public company has sold stock to the public through an initial public offering (IPO) and that stock is currently traded on a public stock exchange or in the over-the-counter market. The ability to sell shares to the public is very important to these companies because it provides them with a source of capital to fund growth.

Public companies are highly regulated by the Securities and Exchange Commission (SEC). The SEC requires public companies to meet stringent financial reporting requirements, along with disclosing other information that is relevant to the financial health of the company. The stock exchanges where the company’s shares are traded also have their own sets of financial reporting requirements.

In addition to SEC and stock market regulation, public companies also face other types of regulations such as the Sarbanes-Oxley Act of 2002.

Public companies are ultimately owned and controlled by the shareholders.  In most public companies, no single shareholder has much control over the company.  Rather, shareholders elect a board of directors who oversee the company’s operations on their behalf. Still, certain types of transactions, such as mergers, must be brought up for shareholder approval.

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