7 Benefits of a Public Limited Company for Your Business

A public limited company (PLC) is a type of business entity that can offer its shares to the public. Unlike a private limited company, a PLC has more access to capital, more visibility and more prestige. However, it also has more regulations, more costs and more risks. In this article, we will define what a public limited company is, how it differs from other types of companies, and what are the benefits of choosing this structure for your business.

What is a public limited company?

A public limited company is a legal entity that has a separate identity from its owners and managers. It can own assets, enter into contracts, sue and be sued, and pay taxes. A PLC has two main features:

It can offer its shares to the public through a stock exchange or other means. This means that anyone can buy and sell its shares, and the company can raise funds from a large number of investors.
It has limited liability for its shareholders. This means that the shareholders are only liable for the amount they invested in the company, and not for its debts or obligations.

How does a public limited company differ from other types of companies?

There are different types of companies that can operate in the UK, such as sole traders, partnerships, private limited companies (LTDs), and public limited companies (PLCs). Here are some of the main differences between them:

Sole traders and partnerships are not separate legal entities from their owners. They have unlimited liability for their debts and obligations, and they cannot offer their shares to the public.
Private limited companies are separate legal entities from their owners. They have limited liability for their shareholders, but they cannot offer their shares to the public. They have fewer regulations and costs than PLCs, but they also have less access to capital and visibility.
Public limited companies are separate legal entities from their owners. They have limited liability for their shareholders, and they can offer their shares to the public. They have more regulations and costs than LTDs, but they also have more access to capital and visibility.

What are the benefits of a public limited company for your business?

Choosing a public limited company as your business structure can have several advantages, such as:

Access to capital: A PLC can raise funds from a large number of investors by offering its shares to the public. This can help the company to expand its operations, invest in new projects, or overcome financial difficulties.
Visibility: A PLC can increase its brand awareness and reputation by being listed on a stock exchange or other platforms. This can attract more customers, suppliers, partners, and employees to the company.

Prestige: A PLC can enhance its credibility and status by being recognised as a well-established and successful business. This can improve its relations with stakeholders, such as banks, regulators, media, and competitors.

Shareholder value: A PLC can create value for its shareholders by increasing its profits, dividends, and share price. This can motivate the shareholders to support the company’s goals and strategies.

Transferability: A PLC can facilitate the transfer of ownership by allowing its shareholders to sell their shares easily and quickly. This can provide liquidity and flexibility for the shareholders who want to exit or diversify their investments.

Governance: A PLC can improve its governance and accountability by having a board of directors, an auditor, and other external parties to oversee its management and performance. This can ensure that the company follows ethical and legal standards, and protects the interests of its shareholders and other stakeholders.

Innovation: A PLC can foster innovation and creativity by having access to diverse sources of ideas, feedback, and expertise from its shareholders, customers, employees, and partners. This can help the company to adapt to changing market conditions and customer needs.

How to set up a public limited company?

To set up a public limited company in the UK, you need to follow these steps:

Choose a unique name for your company that ends with “PLC” or “plc”.
Register your company with Companies House by filling out an online application form or sending a paper form.
Prepare a memorandum of association that states the name of your company, its registered office address, and its objects (the activities it will carry out).
Prepare articles of association that set out the rules for running your company, such as how decisions are made, how shares are issued, how directors are appointed, etc.
Issue at least one share to each shareholder who will own part of your company.
Have at least two directors who will manage your company’s affairs.
Have at least one secretary who will handle your company’s administrative tasks.
Have an authorised share capital of at least £50,000, of which at least 25% must be paid up before you start trading.
Obtain a trading certificate from Companies House that confirms that you have met the minimum share capital requirement.
Comply with the ongoing reporting and filing obligations, such as filing annual accounts, annual returns, and tax returns, and paying corporation tax.

Public Limited Companies: An Overview

A public limited company (PLC) is a type of business entity that is registered under the laws of the United Kingdom, some Commonwealth countries, and the Republic of Ireland. A PLC can offer its shares to the public and has limited liability for its shareholders. A PLC must have a minimum share capital of £50,000 and must include the words “public limited company” or the abbreviation “PLC” or “plc” in its name. A PLC is subject to more regulations and disclosure requirements than a private limited company.

Global Demand for Public Limited Companies

The global demand for public limited companies is influenced by various factors, such as the economic conditions, the legal environment, the availability of capital, and the investor preferences. According to a report by Ernst & Young, the global initial public offering (IPO) activity in 2023 was robust, with 1,763 deals raising $300 billion, an increase of 18% and 25% respectively from 2022. The report also highlighted that the U.S., China, and the U.K. were the top three markets for IPOs in 2023, accounting for 63% of the global IPO proceeds. The report suggested that the main drivers for the IPO market in 2023 were the strong economic recovery from the COVID-19 pandemic, the low interest rates, the high liquidity, and the increased investor appetite for innovation and growth.

References:

http://www.legislation.gov.uk/ukpga/2006/46/section/58

https://dx.doi.org/10.1016/j.chb.2019.02.012

https://www.gov.uk/bankruptcy/restrictions

https://www.gov.uk/government/publications/re-register-your-private-limited-company-to-a-plc-rr01

https://en.wikipedia.org/wiki/Public_limited_company
https://www.investopedia.com/terms/p/plc.asp
https://www.ey.com/en_gl/news/2023/12/global-ipo-market-ends-2023-on-a-high-with-record-proceeds

https://www.gov.uk/limited-company-formation

https://www.investopedia.com/terms/p/plc.asp

https://www.companybug.com/advantages-and-disadvantages-of-a-public-limited-company-plc/