What you should know...
A public limited company (PLC) is a type of business structure in the UK.
Whilst PLCs are not the most popular company structure - that honour goes to private companies limited by shares - it’s a well-known one, as it's the only structure where its owners can offer shares to the public.
Advantages of a public limited company
- Like a private company limited by shares, a public limited company provides its members with limited liability, with each member only being liable for the nominal value of shares that they hold in the company.
- Being able to offer shares to the public makes it easier for a public limited company to raise capital when compared to other business structure options in the UK.
- Any business that is registered at Companies House as a company is attractive to potential clients and investors, as it projects a professional, well-established image. Public limited companies have an extra level of prestige because they are usually larger corporations.
- Two companies can’t share the same name on the Companies House register. By forming a public limited company, you are stopping anyone else from using your company name, or something similar to your name.
- A public limited company (like the other company types) is a separate legal entity from the people behind it. This means the company can continue to operate whilst the individuals who run and own it change.
Forming a public limited company (PLC)
Completing the documentation required to form a public limited company can be done completely online and should take no longer than 15 minutes. Once the application has been sent to Companies House it will normally be processed within 3 to 6 working hours.
Here is the key information that you need to know about forming and then maintaining a public limited company:
- A public limited company must be registered with Companies House, an executive agency of the UK government, responsible for the incorporation and dissolution of companies.
- For a public limited company to be formed successfully, it must have a unique company name.
- A public limited company requires a registered office address in the same location as its jurisdiction (this can be England & Wales, Wales only, Northern Ireland or Scotland). This is made publicly visible on the Companies House public register.
- The company must consist of at least 2 directors, 1 suitably qualified company secretary (e.g. a chartered secretary, chartered accountant or solicitor) and 1 shareholder (also known as a member). Essentially, this means a PLC can be formed with a minimum of 2 people.
- During the company formation process for a public limited company, the person tasked with taking care of the registration must choose at least 1 Standard Industrial Classification (SIC) code from the provided list (a maximum of 4 codes can be selected). These codes are used to define the industry or industries in which the company will be operating.
- A public limited company must report on its people with significant control position. A person with significant control is any person (or other corporate entity) that has a controlling influence over the business. In most cases, this will be a shareholder.
- A public limited company can’t trade until it has been issued a trading certificate. To qualify for a trading certificate, shares to the value of at least £50,000 must be allotted, with a minimum of £12,500 (25%) of this total being ‘paid up’ (paid for).
- Public limited companies adopt articles of association during the company formation process. This document outlines the rules and regulations in which the company will operate internally. A memorandum of association is also issued. This document states the intention of the company’s first shareholder(s) to form a company.
Frequently asked questions about public limited companies
What are the advantages of a public limited company?
The main advantage of the PLC business structure is that it can offer shares to the public. This can allow the business to raise significant capital from both new and existing investors.
As well as being able to sell on stock markets, PLCs provide limited liability to their shareholders - meaning that if the company were to fall into financial difficulties, they are only liable for the unpaid amount on the shares that they hold in the company. This gives its owners financial protection.
Public limited companies are an esteemed business structure. By operating as a PLC, a business may be more likely to attract customers, investors and other business partners.
What are the disadvantages of a public limited company?
Whilst a public limited company must still file a confirmation statement and annual accounts (like a private limited company), they are generally held to a higher standard and must adhere to more rigorous reporting requirements.
There is also the possibility of an extra level of scrutiny. Because a PLC is likely to have more shareholders when compared to a private company, there is added pressure on the directors to make the company financially successful. Of course, this disadvantage is tied to the structure’s main advantage - being able to list on stock markets.
What are the main differences between private and public limited companies?
The primary difference between the two structures is the fact that whilst a public limited company (PLC) can offer shares to the public, a private company can not.
A PLC needs at least 2 directors and 1 qualified company secretary (the secretary can also be a director). A private company limited by shares only needs 1 director, with the secretary being an optional appointment. Both can be formed with just 1 shareholder.
Simply put, a PLC requires a minimum of 2 people. A private company limited by shares only requires 1 person.
A PLC must submit annual accounts within 6 months of its accounting reference date (ARD) passing. A private company limited by shares has 9 months from its ARD passing to submit annual accounts.
What are the roles of a public limited company’s officers?
The directors must take care of the company on a day-to-day basis, ensuring that everything is being done to ensure the success of the company.
The secretary is tasked with making sure that the company meets all of its filing obligations, correctly and on time.
What is applied to the end of a public limited company’s name?
Public limited companies' names must end in either ‘public limited company’ or ‘plc’.
Can a private company limited by shares convert to a public limited company?
Yes, provided that the necessary appointments are in place (2 directors and 1 secretary) and the required share capital criteria are met.
When ready, an RP01 form will then need to be filed with Companies House with a £20 filing fee, alongside the special resolution required for re-registration. You will then need to apply for a trading certificate.
How do I get a trading certificate?
Provided that a company has allotted at least £50,000 of shares, with 25% of these shares being paid for, it can apply for a trading certificate. This entails completing the SH50 form and then sending it to Companies House.