Public Limited Company

What is a Public Limited Company (PLC)?

A Complete Guide for UK Businesses

If you're considering different business structures for your company, you've probably come across the term "Public Limited Company" or PLC. While most UK businesses opt for private limited companies, PLCs serve a specific purpose and come with unique advantages and challenges.

Let's break down everything you need to know about PLCs in simple terms.

What Exactly is a PLC?

A Public Limited Company (PLC) is a type of business structure where the company can offer its shares to the general public. Unlike private limited companies that keep their shares private among a small group of shareholders, PLCs can sell shares on stock exchanges like the London Stock Exchange.

Think of household names like Tesco PLC, British Airways PLC, or Vodafone Group PLC – these are all public limited companies that ordinary people can buy shares in.

Key Features of a PLC

• Minimum share capital: £50,000 (with at least £12,500 paid up before trading)

• Minimum directors: 2 directors required

• Company secretary: Must have a qualified company secretary

• Shares: Can be offered and sold to the public

• Name: Must end with "Public Limited Company" or "PLC"

• Regulation: Subject to stricter rules and oversight

Good Reasons to Set Up a PLC

1. Access to Capital Markets

The biggest advantage is your ability to raise substantial funds by selling shares to the public. If your business needs significant investment for expansion, research, or major projects, going public can provide access to millions of pounds in capital.

2. Enhanced Credibility and Prestige

PLCs are often viewed as more established and credible businesses. This status can help when:

• Negotiating with large suppliers or customers

• Attracting top talent

• Building trust with stakeholders

• Expanding internationally

3. Employee Share Schemes

You can offer shares to employees more easily, creating powerful incentive schemes that help retain talent and align employee interests with company performance.

4. Exit Strategy for Founders

Going public provides founders and early investors with a clear path to realise the value of their investment by selling shares on the open market.

5. Acquisition Currency

Public companies can use their shares as currency for acquisitions, making it easier to grow through mergers and takeovers.

6. Improved Liquidity

Shareholders can easily buy and sell shares, making the investment more attractive than private company shares that can be difficult to sell.

When PLC Might Not Be Right for you..

1. You're a Small or Early-Stage Business

If your business is still finding its feet or has modest funding needs, the costs and complexity of being a PLC far outweigh the benefits. The £50,000 minimum capital requirement alone might be unnecessary.

2. You Value Privacy

PLCs must publish detailed financial information that becomes publicly available. If you prefer to keep your business affairs private, a PLC structure exposes you to public scrutiny.

3. You Want Simple Management

PLCs require:

• Regular board meetings

• Detailed record-keeping

• Complex reporting requirements

• Compliance with numerous regulations

• Professional company secretary

If you prefer straightforward business operations, this added complexity can be overwhelming.

4. High Costs Concern You

Running a PLC is expensive:

• Legal and professional fees for formation (£10,000-£50,000+)

• Ongoing compliance costs (£50,000-£200,000+ annually)

• Stock exchange listing fees

• Regular audit requirements

• Professional advisory costs

5. You're Not Ready for Public Scrutiny

As a PLC, your business performance becomes public knowledge. Poor results, management decisions, and strategic changes all become matters of public record and media attention.

6. Short-Term Pressure Doesn't Suit You

Public shareholders often expect quarterly results and consistent growth. This can pressure management to focus on short-term gains rather than long-term strategic development.

Alternative Options to Consider

Before jumping into PLC status, consider these alternatives:

• Private Limited Company: Simpler structure, privacy, lower costs

• Private equity investment: Access to capital without going public

• Bank lending or asset finance: Traditional funding routes

• Crowdfunding platforms: Raise smaller amounts from many investors

The Bottom Line

PLCs are powerful business structures designed for established companies with significant capital needs and growth ambitions. They're not suitable for most small businesses or startups.

Consider a PLC if you:

• Need substantial capital (£10+ million)

• Have proven business model and strong financials

• Want to provide liquidity to existing shareholders

• Can handle increased regulation and costs

• Are prepared for public scrutiny

Stick with a private limited company if you:

• Need simpler operations

• Value privacy

• Have modest funding requirements

• Want to keep costs down

• Prefer flexible management structures

Getting Professional Advice

The decision to become a PLC shouldn't be taken lightly. It's essential to consult with qualified accountants, lawyers, and business advisors who can assess your specific situation and guide you through the complex process.

Remember, you can always start as a private limited company and convert to a PLC later when your business has grown and the benefits outweigh the costs and complexity.

Need help setting up the right business structure for your company? At Mail & Co, we provide comprehensive business address services and are expanding our company formation services to help UK businesses get started on the right foot. Contact us to discuss your business needs.