Do SEC regulations apply to private companies?
There are three types of companies that are relevant in this context:
- Private sector / privately owned companies (Pvt Ltd or GmbH or LLC) where a common man cannot buy shares
- Private sector / publicly owned companies (Ltd or AG or Inc) where a common man can buy shares from a public stock exchange, and
- Public sector / government owned companies where government is largest shareholder and common man may or may not be able to buy shares from a public stock exchange.
Some people look at the term “private” in #1 and 2 and call companies in these two categories “private companies”.
Some others look at the term “publicly / public” in #2 and 3 and call companies in these two categories “public companies”.
This causes some confusion from time to time. I don’t even know whether company law recognizes something called “private company”.
SEC regulations apply to companies in #2 category above that are listed on US stock exchanges.
I leave it to you decide whether to call them private companies.
Let me take this opportunity to highlight a similar confusion in the banking industry.
Media calls HDFC Bank, ICICI Bank, et al “Private Banks”.
That’s wrong.
After mislabelling pvt sector banks as "private banks" on page 1, ET defines pvt banking correctly in an inner page. Reminds me of the old saw about newspapers: "Accusations appear on 1st page, denials on 14th page, & apologies on last page between salami ads". pic.twitter.com/C3buFoaiG1
— Ketharaman Swaminathan (@s_ketharaman) March 8, 2018
Unlike “Private Company”, there’s a clear definition of the term “Private Bank”.
Private Bank is a special category of bank that offers Wealth Management products only to High Networth Individuals (HNIs). Private banks can be standalone in the sense that they don’t do any other type of banking (e.g. Julius Baer) OR they can be one out of the many LOBs in a bank that also does other types of banking, such as retail banking, corporate banking, investment banking, etc (e.g. UBS, Credit Suisse, State Bank of India).
Since HDFC Bank and ICICI Bank offer retail banking and business banking products, not just wealth management products, they can’t be called Private Banks. The right term for them is Private Sector Full Service Bank or Private Sector Universal Bank.
Per contra, the private wealth management business of State Bank of India can be called Private Bank even though SBI is a Public Sector Bank.