A UK Public Limited Company (PLC) offers greater prestige, easier access to capital, and the ability to sell shares advertised to the public. It can be totally owned by foreigners.
While a PLC can publicly sell its shares through a Stock Exchange, many privately owned PLC’s operate for the extra status which offers additional opportunities to obtain financing and capital.
The PLC has limited liability benefits which is unusual for a company able to sell its shares on a public Stock Exchange. This means that shareholder’s liabilities are limited to their contributions to the share capital shielding their personal assets from any liabilities which the PLC may incur.
While a typical PLC in the UK is a large well known business like a retail chain or a big manufacturer, one person can form a PLC with limited liability protection and sell its shares on the Stock Exchange or privately.
Public Limited Companies in the UK are governed by The Companies Act of 2006.
Advantages
• The ability to raise capital faster than a private limited company.
• Having its shares listed on the London Stock Exchange can attract larger investments from mutual funds, hedge funds, and institutional traders.
• The risks of ownership can be spread amongst a large number of shareholders by offering shares to the public.
• Early investors can sell some of their own shares for a profit to the later shareholders while still maintaining a large stake in the company.
• Obtaining capital from a large range of investors is advantageous over reliance on a few investors as many private companies do. The few investors can exert more influence over the company than could a large number of shareholders.
• Additional sources of financing may be available to a PLC than a private company. Banks and other financial institutions extend more financing to listed public companies than they do for private ones.
• The ability to raise more financing on better terms than private companies allows the PLC to grow with better expansion opportunities to pursue new markets with new products and acquisitions.
Background
Great Britain and Northern Ireland are known as “Britain” or the “United Kingdom” includes England, Wales, Scotland, and parts of Ireland. Politically, it is considered a unitary parliamentary constitutional monarchy with a monarch (Queen Elizabeth II) an elected Parliament and their Prime Minister.
UK Public Limited Company (PLC) Benefits
UK Public Limited Companies enjoy several benefits like:
• Totally Owned by Foreigners: PLC’s can be completely owned by foreigners.
• Limited Liability: Shareholders liability is limited to the value of their contributions to the shares capital.
• Simple Registration: The registration process is simple.
• One Shareholder: Only one shareholder is required to form a PLC.
• Two Directors: Only two directors are required.
• Low Minimum Share Capital: Initially, only two shares are required.
• Access to the Stock Market: A PLC can access the public London Stock Exchange to advertise and sell its shares to the public more simply than other UK corporations.
• Secure Legal and Political Systems: The United Kingdom’s legal and political systems have for centuries been secure and stable.
• English: English is the official language.
UK Public Limited Company (PLC) Name
A PLC in the UK must choose a company name that is unique from all of the other registered corporations and companies.
Words like “Holdings”, “International” and “Group” are considered sensitive and certain rules must be met to use those words in a company name.
The abbreviation “PLC” must be included at the end of the company’s name. This will give investors the impression that the company is a public one and may be a very large one.
Limited Liability
Shareholders liability is limited to the value of their total contribution to the share capital. This liability extends to any unpaid amounts on their shares. The management also benefits from limited liability, although to a lesser extent than the shareholders.
Shareholders and directors are exempt from liability of the company’s debts unless they gave guarantees like when securing a back loan.
Registration
The registration procedure is very simple for a PLC. Just file the Articles of Association which must explain the company’s purpose, capital, and membership at the Companies House. No business can be conducted until the registration is approved by the Companies House which then issues a Certificate.
London Stock Exchange
In addition, in order to be listed in the London Stock Exchange the PLC is registered as a public company with at least 50,000 GBP authorized share capital and meets filing and disclosure requirements of the London Stock Exchange.
Every company listed in the London Stock Exchange is a PLC. For example, Rolls-Royce Holdings PLC, and the huge oil company British Petroleum is listed as PB PLC.
While every company listed on the London Stock Exchange is a PLC, not every PLC chooses to be listed.
Shareholders
Only one shareholder is required to form a PLC.
Initially, the PLC will issue two shares upon incorporation and registration. Then, it will file a SH01 form to be able to issue up to 12,500 shares.
Later, the PLC will be able to file a SH50 form with the Companies House which will issue a Certificate of Trade before trading can begin. The PLC must verify that a minimum of 25% or 50,000 GBP of share value has been paid.
Profits are typically distributed to the shareholders as dividends. However, PLC’s can retain a portion of the profits as its working capital.
Transferring shares is much easier for a PLC than for a private corporation. This leads to greater liquidity of the shares.
Directors
Every PLC must have at least two directors to manage the company. They can be natural persons over the age of 16. Or, one natural person and the rest can be companies. Shareholders can be appointed as directors. Directors are legally responsible for the PLC. The names and addresses of the directors are part of the public records with the Companies House.
Company Secretary
Every PLC must appoint a company secretary.
Company Address
Every PLC must have a registered company address in the same United Kingdom country where the PLC is registered, such as Wales or England.
Taxes
PLC’s earning a profit (or taxable income) must file a tax return with the HM Revenue & Customs (HMRC) and pay a corporate tax. The current corporate tax rate is 19%.
In addition, any VAT, employer’s PAYE, Construction Industry Scheme, etc. must be paid to the HMRC every year. Company directors are also required to file a Self-Assessment tax return every year.
Annual General Meetings
Every PLC must hold an annual general meeting of the shareholders.
Accounting
PLC’s must file annual returns with the Companies House. File annual accounts with the Companies House which must be audited unless exempted.
In addition, the directors must file amendments with the Companies House if there are any changes to the management or structure of the PLC.
Public Records
Everything filed with the Companies House are available for public inspection.
Shelf Companies
Shelf companies for a PLC are not available.
Conclusion
UK Public Limited Companies enjoy several benefits like: complete ownership by foreigners, limited liability, simple registration, only one shareholder required, two directors are required, low minimum share capital, secure legal and political systems, and English is the official language.
