The main difference between the Public and the Private company is the publicly advertise the sale of the companies shares in a public traded company. Although this does not apply to an offshore company from the Seychelles, Cook Island, BVI and other offshore destinations, as they do not differentiate between a public and private company (for example a plc and ltd denomination).

By having access to publicly advertise your shares online or offline, you can basically use any trick in the book to do a whole lot of self advertisement in order to float the shares between as many people as possible, as having your shares spread, ensures a high frequency of trades. And the more people have your shares the more they will engange in your business ventures, indirectly affecting your business positive.

A private company can legally not advertise its shares to the public, nor expand its shareholder to unlimited amounts of shareholders as they are usually capped to a maxium amount of shareholders. Additionally getting quoted on the Pink Sheets all the sudden provides you with a wast amount of potential shareholders that are looking for the next big deal for their portfolio. This changes the game completely and allows the directors of the company to push their sales in order to attract positive investor feedbacks and eventually higher share prices.

As a public traded company you all the sudden have a much easier access to private loans from banks and investors, by the simple fact that your company is more respected for having a stock symbol that can be found online. You will as company director and/or main shareholder realize you gain access to more options, more credit and more sophisticated ways of raising capital through your shares by speculating in underlying assets or exchanging your shares with another company. This makes it very interesting for even small companies with only a few employers and makes the investment for going public on the Pink Sheets a much higher priority than investing in other part of developing the company. To recap some of the benefits:

• Founders suffer less stock dilution when raising capital
• Has a public displayed Stock symbol
• Banks are more open with their product i.e merchant accounts, better loans
• Company can trade its shares with another public company shares
• Mergers & Acquisitions are giving a higher impact on the share price
• More prestige with suppliers, customers and employees
• The more shareholders the higher traded your stocks will be
• Access to advertisement on channels not provided for private companies

Different type of shares in a public company

Issuing shares can also be done in different ways, and the company can decide to issue preferred stocks and common stocks.

Preferred Stock

Hankey Banking Company when shares were not electronically registered, had to issue their shares to their shareholders as bearer shares. Today getting a proof of share on paper is a lenghty and expensive process compared to our highly effective electronically trading, but non the less possible.

Preferred Stock is usually carries no voting meaning the ownership of the stock will not inflict any power upon the board of the company. Preferred stocks usually do carry some priority over common stock and it may carry a dividend that is paid out prior to any dividends being paid to common stock holders. Terms of the preferred stock are stated in a “Certificate of Designation”.  The following apply to preferred stocks:

Common Stock

The Baltimore Ohio Railroad Company bearer shares as it looked back in times before electronic trading was possible.

Common stock is basically a low type of stock where shareholders receive their dividend payout after preferred stocks holders, bondholders, creditors, etc. Common stock usually hold voting rights, which allows the shareholders to vote on establishing corporate objectives and policy, stock splits, and electing the company’s board of directors. No fixed dividend rights exist for common stock shareholders, thus it is much harder to determine the profit from common stocks.

Although explained in short there is more to how to spread your company stocks and how to divide them up. You can have a look here or here to gain more knowledge, but in general if you never delt with this before we can assist you with a company that can help you spread your stocks into preferred options and outcomes.