Private Company vs Public Company - Explained

The video tutorial explains the differences between private and public companies in terms of ownership acquisition, governance, and fundraising. It highlights how private company ownership requires approval from existing shareholders or directors, while public company shares are traded openly on exchanges. The tutorial also discusses the implications of these differences on corporate governance and securities law.

How can one become an owner of a privately held corporation?

• By investing directly with approval from existing shareholders

• By purchasing shares on a public exchange

• By logging onto an online trading platform

• By participating in a public auction

What is a key characteristic of public companies?

• Shares can only be bought with board approval

• Ownership is restricted to company employees

• Shares are traded openly on public exchanges

• Shares are traded privately among selected individuals

Which of the following is a method for acquiring shares in a public company?

• By inheriting them from a family member

• By receiving them as a gift from a shareholder

• By purchasing them on a public exchange

• Through a private agreement with the CEO

What is a major difference in governance between privately and publicly held companies?

• Public companies can raise funds by selling shares on exchanges

• Privately held companies can sell shares without any approval

• Public companies have no governance structure

• Privately held companies are required to disclose financials publicly

How does the governance structure affect a company's ability to raise funds?

• It determines the type of products the company can sell

• It influences how new ownership interests can be acquired

• It only affects the company's marketing strategies

• It has no impact on fundraising capabilities