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What Is a Publicly Unlisted Company?

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  • Written By: Alex Newth
  • Edited By: Angela B.
  • Last Modified Date: 16 November 2016
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A publicly unlisted company is the combination of a small business and a public company that can sell shares to raise money for ventures. In contrast to a proprietary company, a publicly unlisted company is able to sell to an unlimited number of shareholders but, because the business is small, it is not listed on the official stock market. When an investor buys shares, he or she can sell them back to the company at a later date or can sell them to someone else, because there is no official market for these shares. Investors cannot check the stock market to quickly identify whether the stock is going up or down in value, so an unlisted public company has strict rules for reporting losses or gains to investors.

Public businesses are those that go on the stock market and sell shares to raise money for projects and ventures while helping the investors profit from their investment. A publicly unlisted company follows this same model, but they are not on the stock market. They are public, in the sense that the public can buy shares from the business. The unlisted quality is what most differentiates this business.

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The reason a publicly unlisted company is unlisted is not so much because of laws, but because of size. Unlisted companies are often too small to be listed on the stock market. Though they are small, they can sell shares to an unlimited number of shareholders, but some investors are wary of returns, so the number of shareholders per company is usually small.

They are not listed in the stock market, so publicly unlisted company models have a different relationship with investors than public companies. They usually do not advertise themselves to investors and, in some regions, investor advertising is illegal for this company model. In areas where it is legal, a promoter will usually talk to investors and try to sell shares. These companies are under strict reporting guidelines, usually having to report at the end of the financial year or quarter, so investors know how the shares are doing.

When an investor wants to sell his shares, he or she can sell to one of three entities. The two obvious choices are selling back to the promoter or the business, just like on the stock market. The third entity is anyone else interested in buying the shares from the investor. This is uncommon but is another option for investors.

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