“PLC”, “public company” and “public limited company” are synonymous. The word “pubic” referring to the fact that the shares can be sold to any member of the public.
As with any limited company, the shareholders are protected by limited liability so that their financial contribution to the company is restricted to the amount they subscribe or pay for their shares. Shares in a PLC can be listed on stock exchanges so that they are easily tradable and can be bought and sold by the public.
PLCs are required to comply with stringent reporting and regulatory requirements and are subject to a great deal of oversight; as a consequence, investors and other persons dealing with them have confidence in the financial information available about a PLC. Compliance with regulatory requirements and the associated prestige makes it relatively easy for a PLC to raise capital.
Setting up a PLC.
To set up a PLC, you will need the following:
- Two directors, one of whom must be an individual over the age of 16. The other director can be a corporate body. The directors do not need to be UK residents or nationals.
- Two shareholders. The shareholders can also be the directors and do not need to be UK resident or nationals.
- A suitably qualified company secretary. The following are considered suitably qualified:
- Someone who for at least 3 of the 5 years prior to their appointment held the office of secretary or deputy secretary of a public company.
- A UK-registered barrister, advocate or solicitor
- A member of any of the following bodies: Institute of Chartered Accountants in England and Wales, Institute of Chartered Accountants in Scotland, Institute of Chartered Accountants in Ireland, Institute of Chartered Secretaries and Administrators, the Chartered Association of Certified Accountants, the Chartered Institute of Management Accountants and the Chartered Institute of Public Finance and Accountancy.
- A UK-registered office. This will be the official address of the company. The company does not need to have a physical presence at this address and can have a trading address elsewhere, even outside the UK.
- Authorised Share Capital of at least £50,000. However, only 2 shares need to be allotted when the company is formed.
- The name of the company must include the suffix “PLC” or “Public Limited Company”
- Public limited companies registered in Wales can choose one of the Welsh equivalents, ‘cwmni cyfyngedig cyhoeddus’ or ‘ccc’.
- A few public limited companies formed under specific legislation, usually nationalised bodies, are exempt from having the PLC, or equivalent, suffix at the end of their name.
- A Memorandum of Association that states that the company is a PLC. This is provided automatically when you use our service to form your PLC.
Advantages of PLCs
PLCs are subject to very stringent oversight especially if they are listed on a recognised stock exchange. The conduct of their directors, their trading results and their finances are subject to regular reviews. As a consequence, investors, lenders and customers can have confidence in their dealings with PLCs. Accordingly:
- PLCs can raise capital from members of the public and institutions, especially if they are listed on a regulated exchange. PLCs have a larger pool of investors from which they can raise equity
- Instead of being funded by large investors, a PLC can raise funds through many small investors who are risking relatively little.
- A PLC can easily finance growth through acquisitions and investment by having access to capital markets and being able to issue shares to the shareholders of the acquired companies.
- Lenders such as banks are happier to lend to established and regulated businesses and will lend at lower rates of interest than is available to other companies.
- Customers feel safer buying from established and well-regulated companies and sales are easier to achieve.
- Investors do not need to worry about being able to liquidate their investment in a listed PLC because they can sell their shares on the exchange. So, they have no need to worry about an exit strategy.
- PLCs have access to larger investors and lenders who are unable to make investments and loans to smaller companies.