Key Takeaways

  • A public limited company (PLC) is a corporation whose shares can be bought and sold by the general public.
  • PLCs exist in the United Kingdom, the Republic of Ireland, and some Commonwealth jurisdictions.
  • Common characteristics include limited liability, share capital requirements, an IPO, and floating stocks.
  • Limited liability protection helps shareholders avoid personal responsibility for the company’s debts.
  • Going public offers PLCs more access to capital they can reinvest into business growth.
  • Disadvantages include increased regulatory burden and potential loss of control.
  • Examples of well-known PLCs include Marks & Spencer, BP, and AstraZeneca.

Similar (but not identical) to public companies in the United States, a public limited company (PLC) is a type of corporation with limited liability that offers its shares to the public. 

This business structure is used in the United Kingdom, the Republic of Ireland, and some Commonwealth jurisdictions. 

This article will explore fundamental information about public limited companies, including their advantages, disadvantages, and defining characteristics.

Definition of a Public Limited Company

Public limited companies in the UK (and select other areas) have permission to sell their stock to the general public on the stock market. This comes with certain advantages, including increased access to capital. 

Conversely, they are also subject to strict regulations, including detailed financial disclosures and high governance standards. 

All companies listed on the London Stock Exchange are PLCs. However, not every PLC is listed on this exchange.

Features of a Public Limited Company

Certain features of a public limited company differentiate them from private companies and other business structures. 

Among these distinct features are:

Limited Liability

The shareholders of a public limited company have limited liability. The extent of their liability is limited to their investment in the company’s shares and does not extend to their personal assets.

Share Capital

Share capital refers to the amount of money a company must raise by issuing common or preferred stock shares to demonstrate financial stability before it can be publicly traded. 

Under U.K. company law, PLCs must have a minimum share capital of £50,000.

Transparency And Disclosure Requirements

Before a public corporation can make an IPO, it must disclose company information and describe the shares that will be sold. Public corporations must also comply with the stock exchange's listing requirements on which their shares are sold. 

Public Listing and Trading Of Shares

Public limited companies can list their shares on stock exchanges, including the London Stock Exchange. Once they go public, these shares are available for purchase by any retail investor. 

IPOs and Certifications

Once they receive permission, public companies make an initial public offering (IPO) of registered securities. Before business operations can begin, a public limited company must also obtain a Certificate of Trading

If incorporated in Wales, England, or Scotland, a PLC must also register with Companies House. In doing so, it simultaneously registers for Corporation Tax.

Advantages of a Public Limited Company

There are numerous advantages to forming a public limited company over keeping a company private. 

These are five notable advantages:

  1. Limited Liability Protection For Shareholders

As the name suggests, a limited company offers limited liability protections.  

Shareholders cannot be held personally liable for the company's debts, as the company is a legal entity.

  1. Enhanced Credibility And Public Profile

Being listed on a stock exchange can enhance the company’s credibility and authority. 

Unlike private companies, public companies must make their financial statements publicly available. 

This means that shareholders will always know the company's financial standing. Because public disclosure of financial statements is mandatory, it will be easy to determine the value of the company’s shares.

  1. Access to Capital Markets

Raising capital is much easier for a public company than a private company.  

When a public limited company needs capital, it can simply offer more of its shares on the market. Public companies can also issue bonds to raise capital. 

  1. Transferability of Shares

Another advantage of public limited companies is that shares are easily transferable. 

They may be bought and sold on a public stock exchange and easily transferred between company members.

This liquidity is appealing to those who prefer flexibility and the ability to quickly enter or exit their investment positions.

  1. More Opportunities to Expand

With access to the public capital markets, PLCs can raise the required capital to fund the growth and development of business plans. 

This frees up capital to invest in new projects or areas like research and development.

Disadvantages of a Public Limited Company

While forming a PLC has many potential benefits, this business structure also has potential drawbacks.

These include: 

Increased Regulatory Burden

PLCs face stringent legal requirements. These companies enlist legal and financial teams to ensure compliance, but this is costly, both financially and in terms of time.

Loss of Control

When a company goes public, its original owners can lose some of their control over its direction, as shareholders have voting rights. This can make decision-making challenging and lead to internal conflicts.

Market Pressure

PLCs are under pressure to win the approval of investors and market analysts in the short term. This focus on quarterly results can compromise longer-term strategic planning. 

Potential Loss of Competitive Advantage

Although the requirement for transparency can help PLCs establish credibility and authority, it also comes with its challenges.  

This transparency also means that a PLC’s business strategy, financials, and operations are available for competitors to examine. 

Competitors can learn how a company’s business model and strategic plans are being developed, reducing its competitive advantage.

Examples of Public Limited Companies

Some of the world's biggest companies are PLCs, many of which have instantly recognizable names.

Here are just a few examples of well-known PLCs:

Marks & Spencer 

This retail powerhouse is based in London and was formed in 1884. Interestingly, in 1998, Marks & Spencer became the first British retailer to make a pre-tax profit of over £1 billion.

BP

BP p.l.c., headquartered in London, is a financial giant that consistently ranks among the world's top companies in terms of revenue and profit.

AstraZeneca

This multinational pharmaceutical company is headquartered in the United Kingdom. Some of their best-known medications are FARXIGA® and NEXIUM®. 

Learn More About Public Corporations

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