Definition of public limited companies

Written by brandi berry-fulton
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A public limited company (PLC) is also referred to as a publically held company. A company that is publicly held means that the company offers its stock to be purchased by the general public through a stock exchange. A PLC is typically owned by several investors while a private company is normally held by very few shareholders.

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PLC

A PLC is a company that is owned by at least two people and offers it shares to be bought by anyone within the public. When a company is registered as a PLC it is done so under the provisions of the Companies Act 1980. The company's name has to include either the words "Public Limited Company" or the initials PLC after the company name.

Location of PLC

A public limited company is a type of limited company within the United Kingdom, Republic of Ireland, and other English speaking countries outside the United States. PLC is not used in the United States, but it is equivalent to the "Inc." that is used within the United States.

PLC Shares

A PLC must have authorised share capital over £50,000, with £12,500 paid up. The liability of each member that owns shares of the company is limited to the amount unpaid on shares that each single member holds. PLCs are regulated a lot more closely than limited companies. The members are required to agree to take some or even all the shares when the company is registered. The memorandum must list the names of the people who have agreed to take shares and the number of shares that each person has agreed to take. These members are referred to as subscribers.

PLC Share Types

Bearer shares are legal instruments denoting company ownership, typically in the form of share warrants. Cumulative preference shares carry rights that if dividends cannot be paid in one year, then it will be carried forward into successive years. Ordinary shares have no special rights or restrictions. Preference shares typically carry the right that any annual dividends available for distribution can be paid preferentially on these shares before other classes. Redeemableshares are issued with an agreement that the company will buy them back at the option of company or stockholder after a set amount of time. A company cannot have redeemable shares only.

Advantages & Disadvantages of PLC

The advantages of a PLC is that PLCs often dominate the markets, huge amounts of finance can be raised, and it is easy to borrow from lenders due to the large size of the company. Set-up cost of a PLC can be extremely high, there is no control over who buys the shares in the company, it must follow the rules of the Companies Act, and it must publish annual accounts.

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