A Public Limited Company, or PLC company, is a small or medium-sized business that wishes to take advantage of obtaining public company status.  In the past, it was nearly impossible for a small or medium-sized business to offer its shares to the public in order to raise capital.  This is because a business had to be admitted to one of the official stock markets in order to engage in these activities and admission was limited to only a small number of large companies. 

When the 1985Companies Act was created, the rules regarding the formation of a Public Limited Company were established.  This made it much easier for a business to acquire public company status. 

Rules and Regulations for the Formation of a PLC Company   

In accordance with the 1985 Companies Act, there are a number of conditions that have to be met in order to become a Public Limited Company.  These include: 

• The company must state that it is a PLC company within its name and in its memorandum  
• The memorandum must adhere to a specified form  
• The company must have at least £50,000 of authorized share capital  
• The company must have allotted shares with a value of at least £50,000, with a quarter of them (£12,500) being paid up.  
• Shares may not be used to do work or to perform services  
• Payment for shares may be by ‘cash’ or by ‘non cash’ only, with the non cash option typically being property or other tangible assets and the transition must occur within 5 years of the allotment  
• Each of the company’s allotted shares most be paid up to a minimum of one quarter of its nominal value combined with the whole of any premium (for example, share with a nominal value of £1.00 is sold for £8.00, which results in a premium of £7.00 that must be paid to the company along with a minimum of a quarter of the nominal value of each share.  A quarter of the nominal value would be £0.25, which is added to the premium of £7.00 for a total of £7.25)  
• UK and Scottish Public Limited Company formations must appoint two directors as well as a company secretary  
• The PLC company may not do business or use its borrowing powers unless the Registrar has issued a certificate of entitlement to do business and to borrow – this process typically takes two weeks to complete 

Despite all of the rules surrounding the formation, there are a number of benefits associated with becoming a PLC company.  Aside from being able to obtain a public company status, the PLC company is under no obligation to float its shares or to offer them for sale.  In fact, if the shareholders wish, the company can remain private.  Furthermore, if the shares are fully paid, the shareholders have no liability.  

If you think it is time to form a PLC company, Novik and Co. will be happy to complete the process for you.  Or, if you need some more information and would like some more assistance with weighing the pros and cons, contact one of representatives today to learn more.