Well over 95% of limited companies in the UK are “private” – it is by far the most common form of limited company.
The main advantages of a being public limited company are:
- Better access to capital – i.e. raising share capital from existing and new investors
- Liquidity – shareholders are able to buy and sell their shares (if they are quoted on a stock exchange)
- Value of shares – the value of the firm is shown by the market capitalisation (based on the share price)
- The opportunity to more easily make acquisitions – e.g. by offering shares to the shareholders of the target firm
- To give a company a more prestigious profile
As always there are some disadvantages to being a PLC (as opposed to remaining as a private company). The main downsides are:
- Once listed on a stock exchange, the company is likely to have a much larger number of external shareholders, to whom company directors will be accountable
- Financial markets will govern the value of the company through the trading of the company’s shares, and will represent the market’s view of the company’s performance over time
- Greater public scrutiny of the company’s financial performance and actions
These are the main differences in summary:
- You must use the description ‘PLC’
- A public company must have issued share capital to a nominal value of £50,000 of which 25% must be paid up.
- Only public companies can offer their shares to the public
- There are strict rules that shares must be issued for full value
- PLCs must file their accounts within 6 months from their year ends
- PLCs must have two directors
- PLCs must have a suitably qualified company secretary
- PLCs must hold AGMs when the accounts can be received
- PLCs cannot approve written resolutions unless authorised by the articles
- There are strict regulations on PLCs purchasing or providing financial assistance to purchase their own shares
- Traded PLCs cannot place restrictions on transfers of its shares. Otherwise such restrictions in the articles are permitted
- Election of directors at general meetings must be in separate resolutions
- PLCs cannot take advantage of the abbreviated accounts regime (but nor can larger Ltd Co’s)
- Listed PLCs can hold shares in treasury (with limits)
- Listed PLCs must have their remuneration report approved at the AGM
- PLC directors can only have authority to issue shares for five years
- A PLC articles cannot exclude pre-emption rights on the issue of new shares
- PLC financial results must use International Accounting Standards if listed but unlisted Plc’s can use UK GAAP
- Nominees of PLC shareholders where the PLC is listed on a regulated market can nominate information rights for the shareholders
- The articles of PLCs must have a specific authority to enable the board to authorise a transaction where the director has a conflict of interest
steve@bicknells.net
