Listed Company vs Unlisted Company: Difference and Comparison

Key Takeaways

1. Listed companies are registered on a public stock exchange while unlisted ones are not publicly traded.
2. Listed companies have greater access to raise capital but face more regulatory oversight.
3. Listed companies provide more transparency through regular financial disclosures.

What is Listed Company?

A listed company is known by another name called a ‘public traded company.’ In this company, the shares can be traded on the stock exchange. Also, the company has to go through the process of IPO (Initial Public Offering), in which the customers or public interested can buy or sell the shares. 

The company’s key feature is that it has a wide area of investor base of shareholders. They may be anyone, such as – mutual funds, individual investors, institutional investors, or other entities. Listed companies are subject to regulatory compliance. Aldo, the level of transparency in the listed company is higher.

What is Unlisted Company?

An unlisted company is known by another name called a ‘private company.’ In this company, the shares cannot be traded on the stock exchange and are owned by a group of individuals like – family members, founders, or a selected group of investors. Unlike listed companies, the shares are not available for public trading.

The company’s key feature is its ownership structure. Being concentrated within small or close groups, the control and decision-making autonomy is excellent. An unlisted company has less regulatory compliance. Also, the level of transparency in the unlisted company is lower. 

Difference Between Listed Company and Unlisted Company

1. A listed company is publicly traded, and the persons holding shares are the owners. While in contrast, an unlisted company is privately held, and few individuals or group owns the company.
2. In a listed company, shares are traded on the stock exchange. On the other hand, in an unlisted company, shares cannot be bought or sold on the stock exchange.
3. Listed companies are subject to regulatory compliance. At the same time, an unlisted company has less regulatory compliance.
4. The company has to disclose its financial information to the public in a listed company. In contrast to this, an unlisted company has the authority to disclose limited financial information or not.
5. In a listed company, they may access capital by issuing additional shares. Comparatively, on the other hand, an unlisted company may have access to capital through private funding sources or debt financing.
6. The level of transparency in listed companies is high, while, on the other hand, the level of transparency in unlisted companies is low.
7. In a listed company, it is much easier to sell or buy the shares, while, on the other hand, in an unlisted company, the shares are illiquid and difficult to trade.
8. The investor base is wide in the case of a listed company, while it is the opposite for the unlisted company where the investor base is small.
9. In a listed company, shareholders can influence the decision and vote. In contrast, comparatively, on the other hand, in an unlisted company, shareholders have very limited rights and may vary according to the agreement.
10. A listed company can offer an Initial Public Offering (IPO). At the same time, it is not possible in the case of an unlisted company where it cannot provide an IPO for public trade. 

Comparison Between Listed Company and Unlisted Company

Parameter of Comparison	Listed Company	Unlisted Company
Ownership	The company is publicly traded, and the persons holding shares are the owners	The company is privately held, and few individuals or group owns the company
Trading of Shares	On stock exchange	Not on the stock exchange
Regulatory Compliance	They are subject to regulatory compliance	They have less regulatory compliance
Disclosure	The company has to disclose its financial information to the public	The company has the authority to disclose limited financial information or not
Access to Capital	Issue additional shares	Through private sources of funding or debt financing
Transparency	High level	Low level
Liquidity	Easily tradable shares	Not easily tradable or is said to be illiquid
Investor Base	Wide	Small
Shareholder Rights	Can influence the decisions	Limited and varies according to the agreement
Initial Public Offering (IPO)	Can offer to become listed on the stock exchange	Cannot offer to become publicly traded

References

1. https://www.taylorfrancis.com/chapters/edit/10.4324/9780203094921-22/audits-private-companies-john-christian-langli-tobias-svanstr%C3%B6m
2. https://academic.oup.com/icc/article-abstract/22/4/953/755472