Public Limited Company

Public limited companies (PLCs) share similarities with private limited companies as legally distinct entities with their assets, profits, and liabilities. However, PLCs have the advantage of freely selling and trading their shares to the general public and listing them on stock exchanges. This makes PLCs the only type of company permitted to raise capital from public investment.

To become a PLC, the company must be incorporated with Companies House and establish a constitution, typically through articles of association and a memorandum of association. Additionally, they must have a minimum allotted share capital of £50,000, with at least 25% fully paid up. This capital requirement must be reflected in a Certificate for Commencement of Trading, obtained from Companies House.

Moreover, PLCs are required to have a minimum of two directors. Additionally, a company secretary with professional qualifications is mandatory for PLCs. These measures ensure proper corporate governance and compliance with regulations for public companies.

What are the advantages of becoming a Public Limited Company?

Becoming a Public Limited Company (PLC) offers several advantages, primarily centered around access to capital and increased exposure in the market. Here are the key benefits:

Capital Raising: Going public allows the company to raise significant capital by issuing shares to the general public. This infusion of funds can be used to fuel expansion, invest in new projects, or pay off debts.

Increased Publicity: The process of going public attracts media attention and investor interest, resulting in increased visibility and brand recognition. It introduces the company and its products to a broader audience of potential consumers.

Improved Liquidity: Publicly traded companies enjoy greater liquidity in their shares, as investors can easily buy and sell them on stock exchanges. This enhances the attractiveness of the company’s stock to investors.

Currency for Acquisitions: A publicly traded company can use its stock as currency for acquisitions, making it easier to execute mergers and acquisitions as a growth strategy.

Enhanced Valuation: Going public often leads to improved valuation for the company. Publicly traded companies are subject to market scrutiny, which can result in fairer valuations compared to private companies.

Access to Talent and Incentives: Public companies have the advantage of offering stock-based incentives to attract and retain top talent, aligning the interests of employees with those of shareholders.

Prestige and Credibility: Being a publicly listed company enhances the company’s prestige and credibility in the market, attracting potential customers, partners, and investors.

However, it is important to consider that going public also brings increased regulatory and compliance requirements, as well as higher scrutiny from shareholders and the public. As a result, this route is more suitable for established and mature companies with a solid infrastructure and a clear growth plan. The decision to go public should be carefully evaluated, taking into account the company’s financial health, long-term goals, and readiness to comply with the additional responsibilities of being a publicly traded entity.

Documents Required for Incorporation of Public Limited Company

  1. Digital Signature Certificate (DSC) and Directors Identification Number (DIN) of all Directors.
  2. Copies of identity proofs, such as Aadhar Card, Voter ID, PAN Card, or passport of all directors.
  3. Passport-size photograph of all Directors.
  4. If the registered office is set up in a rented property, a rental agreement and a no objection certificate from the landlord are required.
  5. If the registered office is set up in an owned property, ownership property documents are needed.
  6. Utility bills of the business place to serve as proof of the registered office address.