A PLC can be a listed or unlisted business on stock exchanges and generally must include "public limited company" or the letters "PLC" as part of its legal name. But, some private limited corporations are formed pursuant to special laws and are exempt from having any distinctive suffixes.

How a PLC Works

A PLC is a name given to a company that has made available several shares to stockholders. Shareholders who purchase these shares are only liable for the cost of their purchase and cannot be held accountable for loss to their business that is greater than their share cost. In the U.K., PLC operates in the same manner as a public company within the U.S. The operations of the PLC are controlled, and it must issue regularly-scheduled reports to shareholders and prospective shareholders regarding its financial condition.

Requirements for a PLC

U.K. company law says that the PLC must be registered with the PLC designation in addition to the company's name, and a minimum amount of shares to be PS50,000. As a publicly traded business based in U.S., PLC offers various shares, like conventional preference shares. The ordinary share of a PLC is similar to the shares of a PLC are comparable to the common shares that are issued through U.S. corporations.

Cumulative preferred shares are similar to preferred shares that are available in the U.S. Other essential conditions for having a PLC include offering shares in exchange for directors' appointments and complying with the registration requirements. The PLC should also have PLC in the name.

PLCs incorporated within Wales, Scotland, or England must be registered at Companies House, an agency of the Department for Business, Innovation, and Skills. PLCs must also include at least one director. At least two directors govern the majority of PLCs. Directors of the PLC are generally any person; however, there are certain disqualifications, for instance, a person with a bankruptcy restriction order or a person aged 70 or older or younger than 16.

A publicly restricted company's shareholders must also be able to purchase all or a portion of the shares owned by the company when the company is officially registered. The memorandum of association for the company should include the names of the members who have signed a contract to purchase these shares, as well as the number of shares each member will acquire. These are called subscribers.

The company has to have allotted shares worth at least PS50,000, and one-quarter are completely paid. The PLC is similar to publicly traded companies in the U.S. and can have various shares available, all with different conditions and specific characteristics associated with the shares.

Advantages and Disadvantages

The main benefit of creating a PLC can be that it allows you to raise capital through the issue of public shares. Listing on a public stock exchange draws interest from investors from hedge funds and mutual funds and professionals trading as well as individuals who invest. This leads to a greater possibility of investing capital in the business that a private limited company could amass.

However, there are more regulations for the PLC within the U.K. In comparison, it is for a public company within the U.S. They're required to hold annual general meetings open to all shareholders and to meet greater standards of transparency in their accounting. Since they're public entities, they're susceptible to the pressure of shareholders and takeover offers from competitors.

The company is offered more capital access as a PLC, and shareholders get liquidity. Similar benefits can be found in an organization operating in the U.S. going public. On the other hand, being a PLC implies greater scrutiny and reporting requirements. The company will be able to attract more shareholders, and the worth of the business could be more volatile because the market for financial instruments reveals its value.

PLC vs. LTD

PLC is a public company in the U.K. There are also private limited companies which are private corporations within the U.K. The shares that belong to a private business are not sold openly to the public. Private companies remain incorporated typically through companies housed at Companies House. They are legally required to possess legal documents to establish the business. Private companies need at least one director.

The company must be a PLC to raise capital through an investment that is public within the U.K. PLCs function like LTDs however; they are publicly traded with shares that can be traded and sold on stock exchanges. Additionally, PLCs must be governed by at least two directors. They also organize annual shareholder meetings.