PLC company formation in United Kingdom

PLC Company in the United Kingdom

A PLC (Public Limited Company) is a limited liability company that raises capital by offering its shares to the public. Its liability is limited through shares. The shares are held by the Shareholders, whose liability is limited to the value of their share, while the Director is the person responsible for managing the company.

The securities of a PLC are traded on an exchange, so they can be bought and sold. The company may offer the shares and bonds to the public if the issuance of the same is accompanied by a prospectus.

A PLC is made up in a similar way to a Private Limited Company: both need to have constitutive documents under the law that must be filed with Companies House and govern how the company is managed.

How a PLC Works

There are slightly different requirements for the structure of a public company, which must have at least two directors and a company secretary. Unlike a public limited liability company, a PLC is governed by more specific regulations: all PLCs may not use the elective system or the ability to make decisions by written resolutions, have stricter dividend rules, and directors must follow codes of conduct.

By law, entrepreneurs wishing to start a PLC must meet the following capital requirements:

• Authorized share capital equal to or greater than £50,000
• Allocated shares equal to a value of £50,000
• 25% of each allotted share must be fully paid up

The Listing Rules determine where and how a PLC can become a listed company, while the City Code on Takeovers and Mergers regulates the sales, acquisitions and merger activities of a PLC.

A PLC may create and issue share capital in another currency, provided that all necessary resolutions have been passed and the requirement to hold a minimum share capital of £50,000 is met.

A PLC in the UK can take a number of forms:

• Listed Company, which is a public company whose securities are admitted to trading on a regulated market in the United Kingdom. The shares must be listed with a standard or premum listing on the Financial Conduct Authority (FCA) list.
• Quoted Company, a listed company described in the Act as a PLC with shares that are listed on the FCA’s official list and admitted to trading, officially listed in the EEA, or shares admitted to trading by the New York Stock Exchange on NASDAQ.
• Traded Company, a listed company defined by UK law in a number of ways: as a company incorporated in the UK whose shares are admitted to trading by or on behalf of the company on a UK regulated market or an EU regulated market or as a company incorporated in the UK with securities admitted to trading on a UK regulated market.
• Unquoted Traded Company, a listed company which is not a listed company, then incorporated in the UK with its unlisted shares admitted to trading on a UK regulated market or an EU regulated market by or on behalf of the ‘company.

Structure

The structure of a PLC consists of the following:

• 2 directors and 1 company secretary with prior experience as required by English law and/or an appropriate qualification
• Registered and administrative office in the United Kingdom
• At least 1 shareholder with a share of any value

Directors may be natural or legal persons of any nationality and need not reside in the United Kingdom. In most PLCs, the directors are also shareholders.

The company secretary must be appointed by the company, may be a natural or legal person of any nationality and must not reside in the United Kingdom. The role of secretary cannot be held by either director.
Any person who possesses the following knowledge and skills may be a company secretary:

• Has served as secretary, assistant, or deputy secretary
• Has served as secretary of a public company for at least 3 to 5 years prior to his or her appointment
• Is able to perform his or her role as secretary well
• Is a member of one 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 Secretaries and Officers, The Chartered Association of Certified Accountants, The Chartered Institute of Management Accountants, or The Chartered
• Institute of Public Finance and Accountancy

Requirements

Public companies must maintain a registered office address in the United Kingdom. The company must have at least two employees, natural or legal persons of any nationality, and must not reside in the UK.

In addition to what has been mentioned in the preceding paragraphs, it is good to specify the requirements relating to the share capital of a PLC: the minimum authorized share capital is £50,000 but, before the start-up of the company, it is essential to allot shares with a minimum value of £50,000 and to pay a quarter of the nominal value of the shares together with the full premium (£12,500).

The classes of shares are ordinary, except in certain circumstances that allow the company to sell or buy in preference shares, different, redeemable with or without voting rights. In the event of liquidation, the full £50,000 must be paid.

Advantages

The main advantage of a Public Limited Company is the opportunity to access new investors and exchanges where it can raise capital by selling its shares to the public. Along with this great advantage, follows the ability to offer investors a defined amount of money as investors can sell their shares quickly.

In addition, if a PLC is planning to expand its business, it can issue shares to the public to finance activities such as: buying a new property, paying off debts, starting a new project, for an active commitment to R&D or creating a new business.

Finally, stock market visibility adds credibility to the company and allows it to attract new potential investors, and PLCs are often considered established companies with a more reliable investment profile.

Fiscal management

A PLC pays corporation tax to the UK on the basis of accounts submitted to HM Revenue and Customs and Companies House.
All companies are required to submit accounts prepared in legal form with the Registrar of Companies and HM Revenue and Customs. A PLC must submit its accounts within 6 months from the date of the accounts and a penalty will be imposed if the accounts are late.
The documents that must be submitted regarding the company’s accounts are:

• A report of the directors, signed by a director or the company secretary
• The balance sheet signed by a director
• The statement of profits and losses
• Any notes or group financial statements

Our packages