If you're studying business, starting a business or expanding your current one, you might have come across the term "Public Limited Company" (PLC) and wondered what exactly it means. In this blog post, we'll take a closer look at what PLCs are, and the key features, advantages, and disadvantages of this business structure in the United Kingdom.
Learn more by watching the video and reading the blog post below:
A PLC is a type of limited company that is publicly traded on the stock market. This means that shares in the company can be bought and sold by members of the public. As a result, PLCs have the ability to raise large amounts of capital through the sale of shares, which can be useful for funding expansion or other growth-related projects. Additionally, PLCs also enjoy greater prestige and reputation, which can be beneficial for the company and its shareholders.
However, there are also some downsides to forming a PLC. For example, PLCs are subject to greater scrutiny and regulation, and there are more compliance and reporting requirements that need to be met. This can be time-consuming and costly for the company.
So, what are the key features of a PLC?
PLCs are required to have at least two directors and a minimum of two shareholders.
PLCs must also have a minimum share capital of £50,000.
PLCs must also publish annual accounts and reports, which are available for the public to view.
In order to form a PLC, a company must first register with Companies House and submit the necessary paperwork and fees. This includes articles of association, a statement of compliance, and a memorandum of association. It's important to note that the process of registering as a PLC can be quite complex and time-consuming, so it's recommended to seek the help of a professional, such as a solicitor or accountant, to ensure everything is done correctly.
Once the company is registered, it can begin the process of raising capital through the sale of shares. This can be done through an initial public offering (IPO), where shares are sold to the general public for the first time, or through a secondary offering, where shares are sold by existing shareholders. It's worth noting that the process of going public can be quite costly, as there are various fees and expenses associated with listing on a stock exchange.
One important thing to note is that being a PLC also comes with additional responsibilities and obligations. PLCs are required to hold annual general meetings (AGMs), where shareholders can vote on important matters such as the election of directors and the approval of financial statements. PLCs are also subject to greater financial reporting requirements, and must prepare and file annual reports and accounts with Companies House.
When considering whether to form a PLC, it's important to weigh the pros and cons and determine if this business structure is the right fit for your company. It can be a great way to raise capital and gain prestige, but it also comes with additional compliance and regulatory requirements. If you have any questions or need advice, it's always a good idea to consult with a legal or financial professional.