A Public Limited Company (PLC) is a UK-registered company which is allowed to offer its shares to the public, although it is not obligated to do so. It can also issue advertisements offering any of its securities for sale to the public. The terms “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.
Before an incorporated PLC can trade or borrow money, it must receive a trading certificate from Companies House. The application for a trading certificate is made on Companies House form SH50. A trading certificate is issued when a company has issued a share capital of £50,000 or more and for which it has received payment of at least £12,500 or 25% of the issued share capital.
- Unpaid shares. Shareholders holding partly paid shares in a PLC can be asked to pay for their shares in full if the company goes into liquidation because of financial difficulties.
- There is a continuing obligation to update the register of PSCs unless shares are traded, and exemption applies
- Unlike a private limited company (LTD), a PLC cannot apply for a voluntary strike off. If the directors do want to proceed with a voluntary strike off, they must first convert the company into a private LTD.
Annual Compliance obligations
- Annual Accounts: Like all limited companies, a PLC must submit accounts annually within six months of its Accounting Reference Date (ARD). The ARD is the date which a company elects to make up its accounts each year. Normally, the ARD is the last day of the anniversary month in which the company was formed. So, a company formed on the 11th November 2019 will make up its first accounts to 30th November 2020 and the ARD will be 30th November in subsequent years. Companies can change their ARD.
- Confirmation statement: The statement includes the following information:
- Location of the company’s statutory registers which should be at the company’s registered office or a single alternative inspection location (SAIL).
- Standard Industrial Classification (SIC) codes – setting out the company’s principal trading activities.
- Statement of Capital detailing the classes of shares, the numbers issued, and the amounts paid for those shares.
- Particulars of each class of share issued i.e., voting rights, aggregate value of each class of share and the amounts paid and unpaid for the shares issued.
- Trading status of shares i.e., whether the shares are traded on a recognised stock exchange.
- A list of shareholders and their shareholdings. Exemptions apply to companies listed on a recognised stock exchange.
- A PLC must have its accounts audited unless it is dormant
- A PLC must arrange Annual General Meetings (AGMs) in which the shareholders can attend to agree the accounts, appoint auditors and decide any other business with written resolutions.
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.
Frequently Asked Questions
Q. Is there a difference between setting up a PLC, setting up a public limited company, forming or the formation of a public company, PLC registration and PLC company formation.
A.No. They all refer to the process of incorporating a PLC at Companies House.
Q.What is the formation procedure of a PLC.
A.Simply go to this page and follow the instructions and you should have your PLC within 1 working day.