Public limited company

A public limited company, often abbreviated as a PLC, is a specific type of business structure. This legal form is used in the United Kingdom, Ireland, and several Commonwealth jurisdictions. These companies are defined by limited liability, which protects the owners' personal assets. A key feature is that their shares can be freely sold and traded to the public. This allows them to raise large amounts of money from many different people. In the United States, these are often called publicly traded companies.

To become a PLC, a company must follow strict financial and legal rules. A company must have a minimum share capital of £50,000 before it can start its business. Of this total amount, at least one quarter, or £12,500, must be paid up immediately. Each allotted share must also be paid up to at least one quarter of its nominal value. This ensures the company has actual money to work with from the start. Companies can increase their authorized share capital by passing an ordinary resolution. They can also decrease it by canceling shares that no one has taken.

There are several different types of shares that a PLC can offer to investors. Ordinary shares are the most common and carry no special rights or restrictions. Preference shares are different because they give holders a priority right to annual dividends. If a company cannot pay a dividend one year, cumulative preference shares allow that payment to carry forward. Some companies also issue redeemable shares, which the company can buy back at a later date. It is important to note that a company cannot issue only redeemable shares. Additionally, bearer shares were abolished in the UK by the Small Business, Enterprise and Employment Act 2015.

Running a PLC requires a specific group of people to manage its operations. A new company must have at least two directors and one secretary. In some countries, like India, the law requires at least three directors. Most people can serve as a director unless they are disqualified. For example, in England, Wales, and Scotland, a person must be at least 16 years old. A person cannot be a director if they are an undischarged insolvent. Some individuals might also be disqualified by a court or due to being over 70 years of age.

Creating a PLC involves preparing several formal legal documents for registration. The memorandum of association acts as the company's charter or constitution. It states the company name, the registered office address, and the company's objects, or goals. The signatories to this document are considered the first directors. Next, the articles of association set the rules for internal management. These rules define how members, managers, and employees interact with one another. Companies must also submit Form 1, which lists details about the directors and the office address.

Registration can happen through a traditional paper process or a modern electronic process. The paper process requires a statutory declaration of compliance, which must be signed by a solicitor. This document must be witnessed by a notary public or a justice of the peace. In contrast, the electronic process is much faster and does not require Form 12. Some electronic companies have been registered in just 23 minutes. Most electronic filings are done through a specialized Company Formation Agent. Regardless of the method, all companies must register with Companies House.

History shows how these business rules have evolved over time. Before 1981, all limited companies used the suffix "Limited" or "Ltd." In 1981, the specific term "public limited company" and the "PLC" suffix were introduced. This helped people distinguish between different types of businesses. In the United Kingdom, Companies House handles registrations for England, Wales, Scotland, and Northern Ireland. Since October 2009, Northern Ireland registrations have been managed by Companies House as well. This centralized system helps maintain organized records for the entire country.

Maintaining a PLC requires constant attention to legal requirements and reporting. Every company must deliver an annual return to Companies House at least once every twelve months. They have 28 days from the date the return is made up to file it. Failing to file this return is a criminal offence that can lead to fines for officers. There are also fees associated with filing these documents each year. Filing by paper costs £40, while electronic filing is cheaper at £13. These rules ensure that the public and the government can see how companies are performing.