What defines a public interest entity?

A public interest entity is primarily characterized by the nature of its securities and the regulatory environment in which it operates. This definition encompasses entities whose transferable securities are admitted to trading on a regulated market, which means they are subject to stringent regulatory and reporting requirements. Being listed on a regulated market signals that the company has a broad base of stakeholders and a public profile, both of which heighten the need for transparency and accountability in their financial reporting.

This definition is vital because public interest entities often have a significant impact on the economy and public at large. They are required to adhere to high standards of governance, oversight, and disclosure to protect investors and maintain market integrity.

In contrast, a private company limited by shares or an issuer whose securities are not traded on a regulated market does not meet the criteria for a public interest entity, as they lack the same level of public scrutiny and regulatory obligations. Similarly, a company merely providing goods to the public does not inherently qualify as a public interest entity unless it is also involved in the trading of transferable securities on a regulated exchange. The correct definition thus hinges on the trading status of securities within a regulated market.