A public limited company (legally abbreviated to PLC or plc) is a kind of public company (publicly held company) in the United Kingdom, the Republic of Ireland, and other Commonwealth jurisdictions. It is a limited (liability) company whose shares are freely sold and traded to the public, with a minimum share capital of £50,000 and the letters PLC after its name.^[1] Similar companies in the United States are called publicly traded companies.

A PLC can be either an unlisted or listed company on the stock exchanges. In the United Kingdom, a public limited company usually must include the words "public limited company" or the abbreviation "PLC" or "plc" at the end and as part of the legal company name. Welsh companies may instead choose to end their names with cwmni cyfyngedig cyhoeddus or c.c.c.^[2] However, some public limited companies (mostly nationalised concerns) incorporated under special legislation are exempted from bearing any of the identifying suffixes.

Registration[link]

When a new company incorporates in England and Wales or in Scotland, it must register with Companies House, an Executive Agency of the Department for Business, Innovation and Skills. In Northern Ireland, although prior to October 2009, companies in that jurisdiction were registered with the Northern Ireland Executive's Department of Enterprise, Trade and Investment, companies registrations are now handled by the Companies House like the rest of the United Kingdom.

Company directors[link]

Formation of a public limited company requires a minimum of two directors (differing from country to country: in India three directors are required). In general terms anyone can be a company director, provided they are not disqualified on one of the following grounds:

• in the case of "plc's" or their subsidiaries, the person is over 70 years of age or reaches 70 years of age while in office, unless they are appointed or re-appointed by resolution of the company in general meeting of which special notice has been given.
• the person is an undischarged bankrupt, or disqualified by a Court from holding a directorship, unless given leave to act in respect of a particular company or companies.
• in England and Wales (as of October 2008; Companies Act 2006) and in Scotland (Age of Legal Capacity (Scotland) Act 1991), the male/female is under 16 years old.

Some people who are not British or European Union citizens are restricted as to what work they may do while in the UK, which may exclude them from being a director.

Company secretaries[link]

The secretary (or each joint secretary) of a public limited company must also be a person who appears to the directors to have the necessary knowledge and ability to fulfil the functions and who:

1. Held the office of secretary or assistant or deputy secretary on 22 December 1980, or
2. For at least three of the five years before their appointment, held the office of secretary of a non-private company or
3. Is a barrister, advocate or solicitor called or admitted in any part of the United Kingdom, or
4. Is a person who, by virtue of his or her previous experience or membership of another body, appears to the directors to be capable of discharging the functions of secretary, or
5. Is a member of any of the following bodies:
   • The Institute of Chartered Accountants in England and Wales,
   • The Institute of Chartered Accountants of Scotland,
   • The Institute of Chartered Accountants in Ireland,
   • The Institute of Chartered Secretaries and Administrators,
   • The Association of Chartered Certified Accountants,
   • The Chartered Institute of Management Accountants (formerly known as the Institute of Cost and Management Accountants), or
   • The Chartered Institute of Public Finance and Accountancy.

Share capital[link]

The members must agree to take some, or all, of the shares when the company is registered. The memorandum of association must show the names of the people who have agreed to take shares and the number of shares each will take. These people are called the subscribers.

There is a minimum share capital for public limited companies: Before it can start business, it must have allotted shares to the value of at least £50,000. A quarter of them, £12,500, must be paid up. Each allotted share must be paid up to at least one quarter of its nominal value together with the whole of any premium.

A company can increase its authorised share capital by passing an ordinary resolution (unless its articles of association require a special or extraordinary resolution). A copy of the resolution – and notice of the increase on Form 123 – must reach Companies House within 15 days of being passed. No fee is payable to Companies House.

A company can decrease its authorised share capital by passing an ordinary resolution to cancel shares which have not been taken or agreed to be taken by any person. Notice of the cancellation, on Form 122, must reach Companies House within one month. No fee is payable to Companies House.

Share types[link]

A company may have as many different types of shares as it wishes, all with different conditions attached to them. Generally share types are divided into the following categories:

• Bearer shares – Are a legal instrument denoting company ownership, and are usually in the form of share warrants. A share warrant is a document which states that the bearer of the warrant is entitled to the shares stated in it. If authorised by its articles, a company may convert any fully paid shares to "share warrants". These warrants are easily transferable without any need for a transfer document; that is, they can simply be passed from hand to hand. When share warrants are issued, the company must strike out the name of the shareholder from its register of members and state the date of issue of the warrant and the number of shares to which it relates. Subject to the articles, a share warrant can be surrendered for cancellation. If so, the holder is entitled to be re-entered into the register of members. Vouchers are usually issued with the share warrants in order that any dividends may be claimed. [This description of "share warrants" might only be applicable to the UK, because it seems to be at odds with practices in Australia and the USA.]
• Cumulative preference – These shares carry a right that, if the dividend cannot be paid in one year, it will be carried forward to successive years.
• Ordinary – As the name suggests these are the ordinary shares of the company with no special rights or restrictions. They may be divided into classes of different value.
• Preference – These shares normally carry a right that any annual dividends available for distribution will be paid preferentially on these shares before other classes.
• Redeemable – These shares are issued with an agreement that the company will buy them back at the option of the company or the shareholder after a certain period, or on a fixed date. A company cannot have redeemable shares only.

A "plc" has access to capital markets and can offer its shares for sale to the public through a recognised stock exchange. It can also issue advertisements offering any of its securities for sale to the public. In contrast, a private company may not offer to the public any shares in itself.

Company formation[link]

Most UK Companies are now formed electronically via Company Formation Agents.

Paper process[link]

The following documents, together with the registration fee are sent to the Registrar of Companies:

Memorandum of Association 

This sets out the company name, the registered office address and the company objects. The object of a company may simply be to carry on business as a general commercial company. The company's memorandum delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature. It is often referred to as the 'charter of a company' or 'constitution of the company'. The signatories to the Memorandum of Association are deemed to be the first Directors of the company. The Memorandum defines the relation of members with the rest of the world.

Articles of Association 

This is the document which sets out the rules for the running of the company's internal affairs. The company's articles delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature. The Articles define the inter-management, inter-member and inter-employee relationship.

Form 1 

This gives details of the first director(s), secretary and the intended address of the registered office. As well as their names and addresses, the company's directors must give their date of birth, occupation and details of other directorships they have held within the last five years. Each officer appointed and each subscriber (or their agent) must sign and date the form.

Form 12 

This is a statutory declaration of compliance with all the legal requirements relating to the incorporation of a company. It must be signed by a solicitor who is forming the company, or by one of the people named as a director or company secretary on Form 10. It must be signed in the presence of a commissioner for oaths, a notary public, a justice of the peace or a solicitor. There is usually a £5 fee payable to the person that witnesses the statuary declaration.

Electronic process[link]

The key difference with the paper process is that there is no Form 12 and requirement for a statutory declaration. This significantly speeds the process and Companies House's record for an Electronic Company formation is 23 minutes.

Because the electronic process requires compatible software that works with Companies House eFiling service,^[3] companies are usually formed through a Company Formation Agent.^[4]

Annual returns[link]

Every company must deliver an annual return to Companies House at least once every twelve months. It has 28 days from the date to which the return is made up to do this.

To help companies meet this filing requirement, Companies House send a pre-printed 'shuttle' form to their registered office a few weeks before the anniversary of incorporation.

All the company has to do is:

• check that the details are still correct,
• amend any that are not, and,
• send the form back, signed and dated, within 28 days of the date of the return which is shown on the front of the form.

There is an annual document-processing fee of £30 (or £15 for users of the Electronic Filing or WebFiling services), which must be sent to Companies House with the annual return.

Conversion[link]

Conversion of a private limited company to a public limited company[link]

Both a private company limited by shares and an unlimited company with a share capital may re-register as a plc., but a company without a share capital cannot do so.

A private company must pass a special resolution that it be so re-registered and deliver a copy of the resolution together with an application form to the Registrar. The resolution must also:

• alter the company's memorandum so that it states that the company is to be a public limited company,
• increase its share capital to the statutory minimum of £50,000,
• make any other alterations to the memorandum so that it conforms to that required for a public limited company,
• make any required alterations to the articles of association of the company.

The private company if it does not already have sufficient issued share capital must issue £50,000 in shares a minimum of 25% part paid.

Conversion of a public limited company to a private limited company[link]

In some jurisdictions a public limited company may re-register as a private limited company or private unlimited company at any time with few formalities.

A court may also order a public company to re-register as private on approving a 'minute of reduction' of share capital which results in the issued share capital falling below the statutory minimum. In such a case the court will also specify alterations to the company's memorandum and articles. A special resolution to re-register is not required.^{[citation needed]}

See also[link]

• European Company Statute
• Limited liability partnership
• Private limited company
• S.A. (corporation)
• Societas Europaea
• United Kingdom company law
• Unlimited company
• Virtual business

Notes[link]

External links[link]

• Companies Act 2006, Office of Public Sector Information
• Companies House guide to company formation

A limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. And the former of these, a limited company limited by shares, may be further divided into public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast anyone may buy shares in a public limited company.

Limited companies can be found in most countries, although the detailed rules governing them vary widely. It is also common for a distinction to be made between the publicly tradable companies of plc type (for example, the German Aktiengesellschaft (AG), Czech a.s. and the Mexican, French, Polish and Romanian S.A.), and the "private" types of company (such as the German GmbH, Polish Sp. z o.o., the Czech s.r.o. and Slovak s.r.o.).

Kinds[link]

Private company limited by guarantee[link]

A company that does not have share capital, but is guaranteed by its members who agree to pay a fixed amount in the event of the company's liquidation. Charitable organisations often incorporate using this form of limited liability. Another example is the Financial Services Authority. In Australia, only an unlisted public company can be limited by guarantee.^[1]

Private company limited by shares[link]

Has shareholders with limited liability and its shares may not be offered to the general public. Shareholders of private companies limited by shares are often bound to offer the shares to their fellow shareholders prior to selling them to a third party.^[2]

Public limited company[link]

Public limited companies can be publicly traded on a stock exchange — similar to the U.S. Corporation (Corp.) and the German Aktiengesellschaft (AG).

In specific countries[link]

United Kingdom[link]

The registration of companies in the United Kingdom is done through Companies House, which operates offices in London, Cardiff, Nantgarw, Edinburgh and Belfast.

Prior to 1 October 2009 the registration of companies in Northern Ireland was the responsibility of the Department of Enterprise, Trade and Investment (a department of the devolved government). On the commencement of the Companies Act 2006 Northern Ireland's previously distinct company law was repealed and the new companies code instituted by that Act was extended to Northern Ireland.

Canada[link]

In Canada, a person wishing to register a limited company must file Articles of Incorporation with either their provincial government or the federal government.^[3]

Australia[link]

The private company equivalent in Australia is the Proprietary Limited company (Pty Ltd). An Australian company with just Limited or Ltd at the end of its name is a public company, such as a company listed on the ASX (although public companies can be, and often are, unlisted). Australia does not have a direct equivalent to the plc.

A shareholder in a limited company, in the event of its becoming insolvent (equivalent to bankruptcy in the U.S.) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid). 'Paid' here relates to the amount paid to the company for the shares on first issue, and not to be confused with amounts paid by one shareholder to another to transfer ownership of shares between them. A shareholder is thus afforded limited liability.

United States[link]

In United States the expression corporation is preferred to limited company (because corporations there have limited liability). A limited liability company (LLC) is a different entity. However, some states permit corporations to have the designation Ltd. (instead of the usual Inc.) to signify their corporate status.

See also[link]

• Types of business entity
• Company formation (UK)
• Corporation
• Limited liability company (LLC) (US)
• Limited liability partnership (LLP) (US)
• Share capital
• Unlimited company
• Yūgen gaisha

References[link]

External links[link]

• Limited liability company UK Business Link
• General information about Limited Liability Companies UK Business Link