A Public Limited Company (PLC) is a designation for publicly traded companies in primarily Commonwealth countries such as the United Kingdom or the Republic of Ireland. This type of company issues stocks, which are then bought and sold (traded) on the open market for the benefit of raising capital. Only PLCs are allowed to be listed on the Financial Times and London Stock Exchange (FTSE), the London stock index.
Requirements to Form a PLC
The formation of a PLC requires several steps. A PLC must have a minimum of two directors, dependent on the country of formation. The minimum share capital value must be over 50,000 sterling pounds, and the PLC will have to pay at least 25 percent. Company formation agents complete the actual formation of the PLC. Each PLC must also register with Companies House, which serves as the United Kingdom's Registrar of Companies.
Public vs. Private Limited Company
The major difference between public and private limited companies is that a private company may not trade its shares on the open market. This allows the private limited company to retain more control (ownership), but a private limited company lacks the ability to raise money through stock offerings. Another distinguishing feature of a private company is that it does not need to disclose the company's affairs, but in some cases it may be subject to more liability.
Age Minimums and Maximums for Directors
Public limited companies must comply with rules pertaining to its directors. According to United Kingdom regulations, a PLC director should not exceed the age of 70. The exception to this requires a re-appointment via resolution of the company and its acting board of directors. Interestingly, while the age minimum to be a PLC director is typically 16, anyone under the age of 16 can be appointed using a similar resolution process.
Benefits
Forming a PLC allows the ability to raise capital quickly by selling company shares. A PLC seeks equity capital because the funds raised by the IPO (intial public offering) is considered permanent; no interest is attached, which means that it is not a debt, and therefore does not need to be repaid. Public limited companies also receive certain profit and tax advantages. A well-executed PLC can generate substantial sums of capital.
