Incorporating a Public Limited Companies (plc) – your questions answered.
A Public Limited company (plc) is a limited liability company whose shares may be freely sold and traded to the public and whose shares may be listed on a stock exchange. They are the only type of company that can raise money by selling shares to the general public.
Businesses that want a company with a prestigious profile, greater access to capital or the ability to be able to advertise and sell shares to the public, may find that incorporating a public limited company is the most appropriate route for their needs.
Similarly, in view of the more stringent capital, regulatory and reporting requirements applicable to public companies, investors and persons having dealings with public companies are likely to have more confidence in their business and structure.
Incorporation of a plc
For incorporation purposes, there are certain restrictions that apply to public limited companies.
Unlike private limited companies, a public limited company requires a minimum of two directors and it must appoint a suitably qualified company secretary.
There is a minimum share capital. Before it can start business, a plc must have allotted shares to the nominal value of at least £50,000 or the prescribed Euro equivalent. Each allotted share must be paid up to at least one quarter of its nominal value together with the whole of any premium on allotment. So, the persons subscribing for shares in a plc must together put in at least £12,500 before the company can commence business.
A new plc cannot conduct business or exercise borrowing powers unless it has obtained a trading certificate from Companies House, confirming that it has the minimum allotted share capital. Please note that although the company can be incorporated with share capital in any currency, to apply for a trading certificate, share capital currency MUST be in Euros or Sterling.
Public limited companies are subject to the same Companies House rules regarding their choice of company names as other company types. The company name must end with either the abbreviation ‘PLC', or the full words ‘Public Limited Company'
Articles of association
Jordans' standard public company articles are appropriate for a privately-held public company that does not intend to seek a stock exchange listing. Alternatively, a plc can be formed with the model articles set out in schedule 3 of the Companies (Model Articles) Regulations 2008 (SI 2008/3229)) or bespoke articles which may be self-contained or incorporate some of the model articles.
If your company is to be listed it will need to comply with the rules, regulations and guidelines issued by the relevant listing authority, which may vary according to the type of listing it is seeking.
Listed public companies generally exclude the model articles and have full length, self-contained articles of association. This makes them more convenient to read, enabling both shareholders and the public to have easy access to a single document.
Whether or not listed, and depending on the size of the company and the nature of its business, the company may wish to:
- require a higher majority approval for certain decisions than is imposed by law
- include special provisions about how to conduct general meetings if it has a very large number of shareholders (for example, by allowing for "satellite" meetings)
- require directors to retire by rotation in a certain order or, if the company is not to be listed, to dispense with retirement by rotation
- limit the directors' powers, for example, in relation to borrowings and other financial obligations in line with industry guidelines or regulatory restraints
As well as assisting with the incorporation of your public limited company, we can assist with drafting bespoke articles of association.