A public limited company (PLC) acts as an incorporated business entity. PLCs appear as a popular form of business in the United Kingdom and other European countries. Forming a PLC offers major benefits to the owners of the business such as personal asset protection and the ability to quickly raise capital.
A PLC appears as a separate legal entity from the owners of the business. This means a PLC may take on activities such as entering into contractual arrangements, as well as accumulating debts and assets. The owners of a PLC have limited liability for the debts and obligations of the business. In other words, the owners of a PLC will not lose their personal assets as a result of obligations and losses incurred while operating the business.
PLCs will find it easier to raise capital when compared with other business types. With the help of a recognised stock exchange, PLCs have the ability to offer shares of company stock to the public, as explained by the Fletcher Kennedy website. Furthermore, PLCs have the ability to advertise sales of stock to the public. As explained on the UKincorp website, offering stock to the public allows a PLC to finance the growth and development of the company in a more flexible manner. Going public allows a PLC to raise large amounts of capital, which may not be possible in a private limited company.
PLCs may be looked upon with greater status in comparison to other business types. As indicated on the Last Bull website, a PLC's brand value can be increased as a result of going public because more people will become acquainted with the company. The prestige or status gained by forming a PLC may help in terms of acquiring loans from banks. Banks appear more eager to provide a loan to a PLC as opposed to a sole trader.
Establishing the correct value of the business appears as an easier task with a public limited company. In the event of an acquisition or merger, it may be easier to arrive at a purchase price for a PLC because the share price reflects the financial health of the company, as explained by the Last Bull website.