Public limited company
Public Limited Company: Characteristics
- A Public Limited Company (PLC) is a company that sells shares to the public in the stock exchange.
- The company is considered a separate legal identity from its owners.
- It requires a minimum of two shareholders, and there is no limit to the number of shareholders it can have.
- The company must have a minimum share capital of £50,000.
- There’s a legal obligation for PLCs to publish their financial accounts.
- The company is controlled and managed by a group of directors who are elected by the shareholders.
Public Limited Company: Advantages
- There is a potential for considerable capital as shares can be sold to the public.
- The risk or liability is spread amongst a large number of shareholders limiting their individual financial exposure.
- It’s easier for PLCs to borrow capital from banks as they are perceived to be more secure.
- The company’s stocks or shares can be bought and sold freely on the stock market.
- A PLC’s existence is not threatened by death, resignation, or bankruptcy of shareholders or directors.
Public Limited Company: Disadvantages
- The company’s policy and decision making may become difficult due to lots of shareholders.
- All financial information must be made public, which includes salaries, profits, and business strategies, leaving them open to competitors.
- There is always a risk of takeover by competitor companies who buy shares in bulk.
- The company is legally obliged to publish detailed financial accounts, which can be a costly exercise.
- It can be more expensive to set up due to legal, accountant, and registration fees.
Public Limited Company: Responsibilities
- PLCs must have their accounts audited every year.
- They are required to pay corporation tax on profits.
- There are legal obligations to follow, such as filing accounts with Companies House and holding an Annual General Meeting (AGM).
- Certain information must be made available to the public, including the company’s register of shareholders and annual accounts.
- The directors have statutory responsibilities and legal obligations based on the Companies Act.