Public Limited Companies (PLC's)
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What are Public Limited Companies

A public limited company, or 'PLC' for short, is a company that is legally allowed to offer its shares for sale to the public. They don't have to offer shares to the public if they choose not to, but the option is there if and when needed.

A PLC is not the most popular choice of company in the UK, in fact over 95% of limited companies in the UK are private limited companies. There are certain differences between the two, and there are specific requirements that a public limited company needs to meet.

  1. With a PLC you need a minimum of two shareholders, but a private limited company will only need one.
  2. There needs to be a minimum of two Directors registered within a PLC. Only one is needed for a private company.
  3. Company accounts are required to be submitted to HMRC within 6 months of the end of the financial year. A private company is allowed 9 months for submission.
  4. You need to have a fully-qualified Company Secretary appointed within a PLC, but a private company secretary does not need to hold qualifications.

There are a lot of advantages to becoming a public limited company, especially if you are interested in raising capital for your business. You can raise share capital from new and existing investors, and shareholders can buy and sell their shares, if they are quoted on a stock exchange.

Nearly all significant businesses operate as an incorporated company. You can make acquisitions by offering shares to the shareholders of another firm, so building your business expertise and knowledge base as well as giving your company a more professional and prestigious public profile.

Your company will have a separate legal identity, and having a legal existence separate from the  management and the shareholders will mean having protection through limited liability. This has to be one of the most important aspects of incorporation, and will mean the members will only be liable for the amount unpaid on their shares should the business fail.

Becoming incorporated will mean protection for your company name. Once registered, no-one else is allowed to use your company name to trade under. Sole traders and partnerships only have trademark legislation to protect their trading names, so you can put your mind at ease that as a PLC your company name will remain your legal property.

Sole traders and partnerships have to pay basic rate or higher rate income tax. Public Limited Companies pay Corporation tax rates, currently set at 20%, on their taxable profits. There are also tax-deductible costs and allowances that can be offset against the company profits for even greater tax savings.

There is a greater sense of continuity for your business once you have formed a PLC. No matter what happens to the company directors, management or employees, the company will remain in existence. The only way a company can cease to operate is when it is wound up or be put into liquidation by order of the courts or Registrar of Companies.

With these advantages aside, there are always some disadvantages to forming a public limited company. These disadvantages are worth thinking about if you are already a private limited company who is thinking about changing over to become a PLC. Things to consider are:

Once publicly traded on a stock exchange, your company will take on a much larger number of shareholders. If you have built up this business on your own from scratch, it may be feel a little painful to see your business divided up so much, as well as having to come to terms with losing overall control of your company. There will also be a greater number of shareholders to whom your company directors will be accountable.

Your company will be at the mercy of greater public scrutiny over its financial performance and executive decisions. The company's worth and value will be governed by the financial markets, through the trading of company shares.

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