Listed Company vs Unlisted Company: Difference and Comparison

Key Takeaways

1. A listed company, referred to as a publicly traded company, is one whose shares are available for purchase and sale on a stock exchange.
2. An unlisted company, also known as a private company, is held privately by a limited number of shareholders.
3. Listed companies have access to a broader pool of capital by insurance additional shares or bonds. In contrast, unlisted companies have limited operations for raising money, relying on private investors, loans, or personal investments.

What is a Listed Company?

A listed company, referred to as a publicly traded company, is one whose shares are available for purchase and sale on a stock exchange. This means the company has undergone an Initial Public Offering (IPO), and its shares are traded among investors in the open market. Listed companies are subject to a set of regulations and requirements.

One of the primary advantages of being listed is access to a broader pool of capital. These companies can raise funds by issuing additional shares or bonds, and they find it easier to attract investors due to the credibility associated with being publicly treated.

Listed companies are required to adhere to strict transparency and reporting standards. They must regularly disclose their financial statements, earnings reports, and other information.

What is an Unlisted Company?

The unlisted company, also known as a private company, is held privately by a limited number of shareholders. These companies have greater privacy as they are not obligated to disclose their financial information to the public. Unlisted companies have more flexibility in terms of decision-making and corporate governance.

Unlisted companies have a concentrated ownership structure, with a limited number of shareholders, including founders, family members, venture capitalists or private equity investors.

These companies thrive in an environment of privacy, flexibility, and control.

Difference Between Listed Company and Unlisted Company

1. A listed company has its shares traded on a public stock exchange, while unlisted company shares are not publicly traded; instead, they are privately held by a limited group of shareholders.
2. Listed companies are subject to stringent regulatory requirements, including regular financial reporting and compliance with securities. In contrast, unlisted companies have fewer regulatory obligations, offering greater privacy regarding financial disclosures.
3. Listed companies have access to a broader pool of capital by insurance additional shares or bonds. In contrast, unlisted companies have limited operations for raising money, relying on private investors, loans, or personal investments.
4. Listed companies must adhere to strict transparency standards, regularly disclosing financial statements, earnings reports and material information to the public. In contrast, unlisted companies have the advantage of greater financial privacy, as they are not obligated to make their financial information public.
5. Listed companies may have a diverse shareholder base, including institutional investors, retail investors and the public, while unlisted companies have a concentrated shareholder base, composed of founders, family members, or private equity investors.

Comparison Between Listed Company and Unlisted Company

Parameters	Listed Company	Unlisted Company
Public Trading	Its shares are traded on a public stock exchange	Privately held by a limited group of shareholders
Regulatory Requirements	Subject to stringent regulatory requirements, including regular financial reporting and compliance with securities law	Fewer regulatory obligations, offering greater privacy in terms of financial disclosures
Access to Capital	A broader pool of capital through the insurance of additional shares or bonds	Limited operations for raising capital, relying on private investors, loans or personal investments
Transparency	Strict transparency standards	Greater financial privacy
Shareholder Base	Diverse, with institutional investors, retail investors and the public	Concentrated with founders, family members or private equity investors

References

1. https://www.jstor.org/stable/2490647
2. https://www.cambridge.org/core/journals/journal-of-financial-and-quantitative-analysis/article/returns-to-acquirers-of-listed-and-unlisted-targets/F0F24CCC092297C03D33A7CDA7963295