Number of Owners in a Public Company
The number of owners in a public company must be at least two but can grow to as many as the company desires.3 min read
2. Who Owns a Public Company?
3. How to Form a Public Company
4. Public Company Finances
5. Public Company Paperwork
6. Limited Liability of a Public Company
The number of owners in a public company must be at least two but can grow to as many as the company desires.
What Is a Public Limited Company?
Public limited companies (PLCs) are a business entity type found in the United Kingdom. They have the word "public" in their name because a public company can offer stock to any interested investors via the London Stock Exchange or Alternative Investments Market.
Corporations in the United States have similar restrictions to public limited companies. Both are highly regulated because of their ability to sell shares so openly. Public companies issue securities through their IPO (initial public offering) and offer loans, bonds, on stock to the public market. To be officially considered a public company, a business must be traded on one of the British stock exchanges or via an over-the-counter market.
Other names for public limited companies include:
- Public company
- Publicly held company
- Publicly traded company
The stock offerings, also called securities, put out by a public company can be through a broker or over the stock exchange. Frequently, private companies will work to become public companies when they want to be able to gain more capital for their business through public shares. Some famous public companies include:
- Google Inc.
- F5 Networks Inc.
- Chevron Corporation
- Procter & Gamble Co.
Who Owns a Public Company?
A public limited company must have a minimum of two shareholders with a minimum of £50,000 offered in the form of shares to the public market. Sometimes, business owners will choose to be classified as a public limited company, but keep their shareholders to a small group, because they don't necessarily want to offer shares to just anyone, but they want the respect that comes with the PLC distinction.
How to Form a Public Company
If an entrepreneur wants to start a public company, or a private company owner wants to branch out, they'll need to follow a few essential steps. First, they'll need at least two directors established for the business and a qualified secretary.
Other business entities, like corporations, can act as directors in a public limited company. However, an individual needs to fill at least one seat at the director table.
To form a corporation in the United States, business owners must file the appropriate paperwork with the state in which they plan to conduct business. Business owners in the United Kingdom must file with the British government agency Companies House. When they file, they'll need to pay the required fee and file their business's articles of association, a business formation application, and other necessary paperwork.
The articles of association required for businesses in the United Kingdom are similar to articles of incorporation filed by companies in the United States.
A name for the company will also be chosen, but certain words undergo more scrutiny than others when used in the name of a business. Such words are those that suggest a level of expertise, a certification, pre-eminence, or a license that the business doesn't actually have.
Public Company Finances
One of the many advantages of structuring your business as a public limited company is the opportunity to raise capital from outside investors. The limited part of the title eludes to the protection afforded to such investors so that they can contribute to different businesses and benefit from profit distributions without worrying about certain liabilities.
A public company has the chance to reach all kinds of potential investors across the market from big-time exchange players to simple individual shareholders.
Public Company Paperwork
Like corporations, public companies do have the downside of additional paperwork when it comes to formation and reporting. Annual financial accounts and tax returns are just some of the requirements.
Limited Liability of a Public Company
Public companies offer protection from liability to their owners and shareholders. This is one of their most well-known characteristics.
If the business defaults on a debt or runs in to legal trouble, the shareholders can only be held liable up to the amount of their initial contribution. The company itself is held liable for debts and taken to court because it is considered its own entity apart from its owners.
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