Public Limited Companies

A public limited company ('PLC') is a company that is able to offer its shares to the public. They don't have to offer those shares to the public, but they can.

Well over 95% of limited companies in the UK are "private" – it is by far the most common form of limited company.

However, you also need to know about "public" limited companies.

There are some specific requirements for a PLC which must be met:

• The minimum number of shareholders must be two (a private limited company only needs one shareholder)
• Accounts must be filed within 6 months of the year end (the limit is 9 months for a private company)
• The Company Secretary must be a qualified person (in a private company the secretary does not need to be qualified)
• The minimum number of Directors is two (just one needed for a private company)

The main advantages of a being public limited company are:

• Better access to capital – i.e. raising share capital from existing and new investors
• Liquidity – shareholders are able to buy and sell their shares (if they are quoted on a stock exchange
• Value of shares – the value of the firm is shown by the market capitalisation (based on the share price)
• The opportunity to more easily make acquisitions – e.g. by offering shares to the shareholders of the target firm
• To give a company a more prestigious profile

As always there are some disadvantages to being a PLC (as opposed to remaining as a private company). The main downsides are:

• Once listed on a stock exchange, the company is likely to have a much larger number of external shareholders, to whom company directors will be accountable
• Financial markets will govern the value of the company through the trading of the company's shares, and will represent the market's view of the company's performance over time
• Greater public scrutiny of the company's financial performance and actions