That doesn't matter for the legal requirements.

The short and only kind of wrong version is:

In the US, companies are not allowed to unfairly privilege some investors over others by giving them access to secret information that would let them judge the future prospects of the company. (Except in all the ways they can, but these usually involve some kinds of insider trading rules.) Private companies can handle giving out secrets to investors by literally writing and memo and mailing it to all their investors, if they want to give out some secrets to one of them.

Public companies cannot do that, even if they knew who all their investors were, but must instead consider every member of the public a potential investor, even if they don't already own the stock. Because of this, when public companies want to reveal material information about their future prospects, they must reveal it to everyone.

The percentage is irrelevant for this discussion. As soon as you’re public, you need to report detailed financial numbers.

Plus, you have to do real GAAP accounting, not their made up metrics.

That's changing with this administration though. Reduced reporting cycles reduce transparency.

It won't impact the disclosure of key business details because it doesn't reduce the level of disclosure needed in the S-1 or the 10-K.

This is an interesting anomaly in the US. In the civilised world all corporations have to file public accounts, as the price for their limited liability. The detail and audit requirements depend on the size, turnover, staff numbers etc. This is because the shareholders are not the only stakeholder. The companies creditors, for instance, who are exposed to the limited liability have a right to see what they are lending to.

To answer the sibling comment, all of these public accounts follow local GAAP or IFRS.

The US still astounds me with its willingness to allow corporations to rip people off!

Creditors in the US can make visibility into financials a requirement for financing if they want. Protecting creditors isn’t a good argument for public reporting.

What are the arguments against public reporting?

As a consumer you are often sending deposits or even the full cost of goods to companies some time before you receive those goods (in effect you become a creditor). You are also dependent upon some of those companies for service and repairs. It seems reasonable that you can check the finances of a company you are creating a business relationship with, I know in the past I've checked company statements.

You are unlikely to have significant enough sway to force that kind of disclosure. Small businesses as consumers have less legal protection and are similarly unlikely to be able to make disclosure a precondition of a deal.

So what. As a customer you can insist on seeing audited financial statements as a condition of purchasing, or purchase from another vendor, or do without. No problem.

Or, in the real world, running a limited liability company could come with some sensible reporting requirements?

Why? And what's sensible about it?

What about potential employees, can they look? The local community that consents to let the company build and operate in their town? How does that help, if they don't follow have to follow GAAP anyway?

Why are those things relevant to either employees or a town?

Most of the US is at-will so the financial health of the company is unlikely to be the reason you’ll suddenly lose a job.

Same for a town, if you’re structuring a deal that has counterparty risk then you mitigate the risk. If an employer is just leasing some office space in your town, why in the world would you ever even think you had the need to look at their financials?

Besides the legal requirement, the reason these companies go public is often to provide liquidity for early investors or employees. So they do want to have as good of a margin story that they can, at least in terms of unit margin.

Isn't there a limit on the public markets where if a company has less than a certain percentage of its ownership traded publicly then it is no longer a public company and therefore de-listed?

I remember hearing about a guy trying to squeeze out short sellers of his own company but ended up effectively taking his company private because he bought out like 95% of all the shares.

I wonder how that aligns to these small releases of stock for the public.

There is no legal minimum free float requirement before deregistration in US, however, different exchanges have different rules

Essentially, a stock has to stay above 1$ per share, have a minimum market cap of $15m, minimum 400 shareholders and "adequate" liquidity If it meets those 4 criteria, it's essentially not at risk of deregistration