PDSnet Glossary

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Definition

A company which may offer shares to the public but which is not listed on any stock exchange. The Companies Act (71 of 2008) distinguishes between public companies and private companies. A public company can offer shares to the public and can have any number of shareholders. Private companies are limited to a maximum of 50 shareholders and have to restrict the transfer of shares. All the companies listed on the JSE are public companies, but there are many public companies which are unlisted and which sell their shares through commissioned salespeople. All the major financial scams in South Africa have used a public unlisted company as their vehicle, because such companies are the least controlled. They do not have to comply with the JSE's rules and they are not defined as collective investment schemes (CIS) in terms of the Collective Investment Schemes Act (45 of 2002). Of course, there are many public companies which are not scams of any sort, but if you are offered shares by a public company which is not listed you should exercise caution. If they say that they will be listed soon and offer you a discount to their listing price, contact their sponsoring broker to establish when they will be listed.

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