Want to Be Publicly Listed? Read Our Overview About Going for Public Listing in Malaysia
Any company can go public, regardless if they are an existing company or a new establishment. This article discusses what a public listed company is, the pros and cons of going public and more. If you are not too sure what are the stakes of going public is, gaining a better understanding of going for Public Listing in Malaysia can help you make a better, informed decision in the future. Read more on the public listing in Malaysia below.
First Things First. What Is Meant by ‘Going Public’?
Going public is a pretty straightforward business. It refers to private companies who transition to make their companies public. After the once-private company becomes public, its initial public offering or IPO can be publicly traded in the stock exchange market. IPO is defined as the process whereby a company prepares to trade its stocks and shares publicly for the first time. Before the actual IPO, the company owner will have to carefully select an investment bank responsible for finding buyers and providing underwriting services to the company. In Malaysia, public limited companies have ‘BHD’, which stands for ‘Berhad’, meaning limited.
To Go, or Not to Go Public?
If you are having a hard time deciding whether or not you should go public, here is a list of pros and cons for you to consider:
- Raise funds.
Unlike private companies, public companies can raise funds by selling stocks and shares in the exchange market. Apart from that, public companies can gain capital in primary and secondary stock markets by allowing the public to invest in their company. On the other hand, private companies are dependent on private investors and loans from the bank, making it harder to amass significant amounts of capital.
- Gain popularity.
Public companies are always in the eyes of the public. Once your company goes public, company information, including all financial records and data, are legally bound to transparency. This means that the public, investors, interested buyers, can all see your company and how well it is doing. The readily available financial information gives onlookers confidence in your company and attracts potential buyers.
Depending on the investment bank of your choice, the transition to IPO may be expensive. This is due to the amount of personnel such as bankers, accountants and lawyers involved in the transition.
- Regulated by strict global accounting standards.
Companies that go public are held accountable by international accounting standards. These companies’ financial reports must be accordingly prepared and adhere to the International Reporting Financial Standards (IRFS).
- The owner of the company will have less control.
Compared to private companies, public company owners have less power and authority over the company. Although not to the full extent, the original owners lose significant ownership to the Board of Directors, who have more controlling powers.
How to Know if My Company Is Doing Well?
A key indicator of how well your company is doing can be seen in the stock performance’s growth. When more stocks are issued in the market, it signifies that the economy is doing well. Inversely, if there happens to be a decrease in the issued stocks, then the economy is reading towards a recession.