Study Notes

Public Limited Companies

Level:
AS, A-Level
Board:
AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

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

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