Private and public companies

Companies fall into two broad categories: private and public.

A privately held company has fewer shareholders and its owners don't have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too. eg. IKEA, Domino's Pizza and Hallmark Cards

It usually isn't possible to buy shares in a private company. You can approach the owners about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange.

Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter. In the United States, public companies report to the Securities and Exchange Commission (SEC) and in India to SEBI. From an investor's standpoint, the most exciting thing about a public company is that the stock is traded in the open market i.e. ETD, like any other commodity. If you have the cash, you can invest.