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.