Starting a business is an exciting moment for any entrepreneur. The company structure you choose for your business will have significant implications on the degree of your personal liability, the amount of tax you pay, the administrative work involved and even your ability to raise finance. In this opportunity, we will explain the most important things you should know about public limited companies.
What is a public limited company (PLC)?
Public limited companies are usually listed on the London Stock Exchange meaning the general population can buy and sell shares in the company. These shareholders become part owners of the business and through voting rights attached to their shares may have a say in how the organisation is run. A public company will typically have a Chief Executive Officer (CEO) and a Board of Directors to manage and oversee business activities.
How do I set up a public limited company?
Any company can be set up as a public limited company (Plc) provided the following conditions are met:
- there are at least two shareholders
- share capital up to the value of £50,000 or more is available with at least 25% of that share capital ‘paid up’
- the company is registered with Companies House
- there are at least two directors - with one being a person rather than a company
- a qualified company secretary has been appointed
What are the advantages and disadvantages of a public company?
If you are thinking of setting up a public limited company it is helpful to understand the pros and cons.
Advantages
- the company can raise finance by selling share capital to the general public
- being a Plc can increase the value of your brand as it gives the impression the company is large and successful
- the liability of the shareholders is limited
- it is easier to exit the company as you can transfer your shares when you are ready to sell
Disadvantages
- the cost of setting up a Plc can be prohibitive for smaller businesses
- you lose control of your business to some extent as you will become accountable to the shareholders regarding the performance of the business and the overall strategy
- there are additional legal and accounting requirements. You must hold an Annual General Meeting and obtain the agreement of the majority of shareholders to any resolutions that affect the business. A full set of accounts that can be analysed by stockbrokers and competitors must also be filed annually with Companies House
Wrapping up
Choosing a public limited company as your legal structure requires careful thought as to the advantages and disadvantages and how these will affect your commercial ambitions. The best action to take is to speak to a Company Law Solicitor who can advise you on the options available.
Get legal assistance from LawBite
Companies seeking a larger profile or looking to establish a prestigious brand or access significant public capital may find incorporating a public limited company a perfect solution. It is important to get legal guidance from the start to avoid any risks in the future.
LawBite expirienced lawyers are ready to help you through the process. Book a free 15-minute legal consultation to discuss your legal issues today.
