Public limited company - AbsoluteAstronomy.com

A public limited company (legally abbreviated to plc with or without full stops) is a limited liability company

Limited liability company

A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...

that sells shares to the public in United Kingdom company law

United Kingdom company law

United Kingdom company law is the body of rules that concern corporations formed under the Companies Act 2006. Also regulated by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal vehicle to organise and run business...

, in the Republic of Ireland

Republic of Ireland

Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...

and Commonwealth

Commonwealth

Commonwealth is a traditional English term for a political community founded for the common good. Historically, it has sometimes been synonymous with "republic."More recently it has been used for fraternal associations of some sovereign nations...

jurisdictions.

It can be either an unlisted or listed company on the stock exchange

Stock exchange

A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

s. In the United Kingdom, a public limited company usually must include the words "public limited company" or its abbreviation "plc" at the end and as part of its legal company name. Welsh companies may instead choose to end their names with cwmni cyfyngedig cyhoeddus or c.c.c.

However, certain public limited companies (mostly nationalised

Nationalization

Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...

concerns) incorporated under special legislation are exempted from bearing any of the identifying suffixes. Some companies in Finland, referred to as "Osakeyhtiö

Osakeyhtiö

Osakeyhtiö, literally a "stock company", is the Finnish equivalent of a limited company or Gesellschaft mit beschränkter Haftung . It is abbreviated to Oy and is used either before or after the company's name, sometimes with the addition of the Finland-Swedish equivalent Ab...

(julkinen)" in Finnish, are called "plc"s in English, which is nothing more but a direct translation of the fact that an "Oyj" is a company listed on the stock exchange.

Registration

When a new company incorporates in England

England

England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

and Wales

Wales

Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...

or in Scotland

Scotland

Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

, it must register with Companies House

Companies House

Companies House is the United Kingdom Registrar of Companies and is an Executive Agency of the United Kingdom Government Department for Business, Innovation and Skills . All forms of companies are incorporated and registered with Companies House and file specific details as required by the...

, an Executive Agency

Executive agency

An executive agency, also known as a next-step agency, is a part of a government department that is treated as managerially and budgetarily separate in order to carry out some part of the executive functions of the United Kingdom government, Scottish Government, Welsh Assembly or Northern Ireland...

of the Department for Business, Innovation and Skills

Department for Business, Innovation and Skills

The Department for Business, Innovation and Skills is a ministerial department of the United Kingdom Government created on 5 June 2009 by the merger of the Department for Innovation, Universities and Skills and the Department for Business, Enterprise and Regulatory Reform .-Ministers:The BIS...

. Northern Ireland

Northern Ireland

Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...

has a separate Registrar of Companies

Registrar of Companies

The Registrar of Companies for England, Wales & Scotland is the official responsible for Companies House, which deals with all filings relating to the Companies Act 1985 to 2006, ensuring the document filings are kept up-to-date and deals with any breaches of the Companies Act.The Registrar Of...

. In the Republic of Ireland

Republic of Ireland

the equivalent executive agency is the Companies Registration Office, Ireland. In Malta

Malta

Malta , officially known as the Republic of Malta , is a Southern European country consisting of an archipelago situated in the centre of the Mediterranean, south of Sicily, east of Tunisia and north of Libya, with Gibraltar to the west and Alexandria to the east.Malta covers just over in...

a firm will register with the Malta Financial Services Authority (MFSA).

While it is not compulsory for a public limited company to offer its shares to the public (some plc's are privately owned, maintaining the "plc" designation for the extra financial status), many do so, and their shares are usually traded on either the London Stock Exchange

London Stock Exchange

The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

or the Alternative Investments Market. Irish public limited companies usually trade on the Irish Stock Exchange

Irish Stock Exchange

-History:The Irish Stock Exchange is Ireland's only stock exchange and has been in existence since 1793. It is an Irish private company limited by guarantee. It was first recognised by legislation in 1799 when the Irish Parliament passed the Stock Exchange Act...

, though many also list on the London Stock Exchange, or more rarely, the Alternative Investments Market.

Company directors

Formation of a public limited company requires a minimum of two directors (differing from country to country: in India three directors are required). In general terms anyone can be a company director, provided they are not disqualified on one of the following grounds:

in the case of "plc's" or their subsidiaries, the person is over 70 years of age or reaches 70 years of age while in office, unless they are appointed or re-appointed by resolution of the company in general meeting of which special notice has been given.
the person is an undischarged bankrupt, or disqualified by a Court from holding a directorship, unless given leave to act in respect of a particular company or companies.
in England and Wales (as of October 2008; Companies Act 2006) and in Scotland (Age of Legal Capacity (Scotland) Act 1991), the person is under 16 years old.

Some people who are not British or European Union citizens are restricted as to what work they may do while in the UK, which may exclude them from being a director.

Company secretaries

The secretary

Company secretary

A company secretary is a senior position in a private company or public organisation, normally in the form of a managerial position or above. In the United States it is known as a corporate secretary....

(or each joint secretary) of a public limited company must also be a person who appears to the directors to have the necessary knowledge and ability to fulfil the functions and who:

Held the office of secretary or assistant or deputy secretary on 22 December 1980, or
For at least three of the five years before their appointment, held the office of secretary of a non-private company or
Is a barrister, advocate or solicitor called or admitted in any part of the United Kingdom, or
Is a person who, by virtue of his or her previous experience or membership of another body, appears to the directors to be capable of discharging the functions of secretary, or
Is a member of any of the following bodies:
- The Institute of Chartered Accountants in England and Wales,
- The Institute of Chartered Accountants of Scotland,
- The Institute of Chartered Accountants in Ireland,
- The Institute of Chartered Secretaries and Administrators,
- The Association of Chartered Certified Accountants,
- The Chartered Institute of Management Accountants (formerly known as the Institute of Cost and Management Accountants), or
- The Chartered Institute of Public Finance and Accountancy.

Share capital

The members must agree to take some, or all, of the shares when the company is registered. The memorandum of association must show the names of the people who have agreed to take shares and the number of shares each will take. These people are called the subscribers.

There is a minimum share capital for public limited companies: Before it can start business, it must have allotted shares to the value of at least £50,000. A quarter of them, £12,500, must be paid up. Each allotted share must be paid up to at least one quarter of its nominal value together with the whole of any premium.

A company can increase its authorised share capital by passing an ordinary resolution

Ordinary resolution

In business or commercial law in certain common law jurisdictions, an ordinary resolution is a resolution passed by the shareholders of a company by a simple or bare majority either at a convened meeting of shareholders or by circulating a resolution for signature...

(unless its articles of association require a special or extraordinary resolution

Extraordinary resolution

In business or commercial law, an extraordinary resolution or special resolution is a resolution passed by the shareholders of a company by a greater majority than is required to pass an ordinary resolution...

). A copy of the resolution – and notice of the increase on Form 123 – must reach Companies House

Companies House

within 15 days of being passed. No fee is payable to Companies House.

A company can decrease its authorised share capital by passing an ordinary resolution to cancel shares which have not been taken or agreed to be taken by any person. Notice of the cancellation, on Form 122, must reach Companies House within one month. No fee is payable to Companies House.

Share types

A company may have as many different types of shares as it wishes, all with different conditions attached to them. Generally share types are divided into the following categories:

Bearer shares – Are a legal instrument denoting company ownership, and are usually in the form of share warrants. A share warrant is a document which states that the bearer of the warrant is entitled to the shares stated in it. If authorised by its articles, a company may convert any fully paid shares to "share warrants". These warrants are easily transferable without any need for a transfer document; that is, they can simply be passed from hand to hand. When share warrants are issued, the company must strike out the name of the shareholder from its register of members and state the date of issue of the warrant and the number of shares to which it relates. Subject to the articles, a share warrant can be surrendered for cancellation. If so, the holder is entitled to be re-entered into the register of members. Vouchers are usually issued with the share warrants in order that any dividends may be claimed. [This description of "share warrants" might only be applicable to the UK, because it seems to be at odds with practices in Australia and the USA.]
Cumulative preference – These shares carry a right that, if the dividend cannot be paid in one year, it will be carried forward to successive years.
Ordinary – As the name suggests these are the ordinary shares of the company with no special rights or restrictions. They may be divided into classes of different value.
Preference – These shares normally carry a right that any annual dividends available for distribution will be paid preferentially on these shares before other classes.
Redeemable – These shares are issued with an agreement that the company will buy them back at the option of the company or the shareholder after a certain period, or on a fixed date. A company cannot have redeemable shares only.

A "plc" has access to capital markets and can offer its shares for sale to the public through a recognised stock exchange. It can also issue advertisements offering any of its securities for sale to the public. In contrast, a private company may not offer to the public any shares in itself.

Company formation

Most UK Companies are now formed electronically via Company Formation Agents.

Paper process

The following documents, together with the registration fee are sent to the Registrar of Companies:

Memorandum of Association : This sets out the company name, the registered office address and the company objects. The object of a company may simply be to carry on business as a general commercial company. The company's memorandum delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature. It is often referred to as the 'charter of a company' or 'constitution of the company'. The signatories to the Memorandum of Association are deemed to be the first Directors of the company. The Memorandum defines the relation of members with the rest of the world.
Articles of Association : This is the document which sets out the rules for the running of the company's internal affairs. The company's articles delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature. The Articles define the inter-management, inter-member and inter-employee relationship.
Form 10 : This gives details of the first director(s), secretary and the intended address of the registered office. As well as their names and addresses, the company's directors must give their date of birth, occupation and details of other directorships they have held within the last five years. Each officer appointed and each subscriber (or their agent) must sign and date the form.
Form 12 : This is a statutory declaration of compliance with all the legal requirements relating to the incorporation of a company. It must be signed by a solicitor who is forming the company, or by one of the people named as a director or company secretary on Form 10. It must be signed in the presence of a commissioner for oaths, a notary public, a justice of the peace or a solicitor. There is usually a £5 fee payable to the person that witnesses the statuary declaration.

Electronic process

The key difference with the paper process is that there is no Form 12 and requirement for a statutory declaration. This significantly speeds the process and Companies House's record for an Electronic Company formation is 23 minutes.

Because the electronic process requires compatible software that works with Companies House eFiling service, companies are usually formed through a Company Formation Agent.

Annual returns

Every company must deliver an annual return to Companies House at least once every twelve months. It has 28 days from the date to which the return is made up to do this.

To help companies meet this filing requirement, Companies House send a pre-printed 'shuttle' form to their registered office a few weeks before the anniversary of incorporation.

All the company has to do is:

check that the details are still correct,
amend any that are not, and,
send the form back, signed and dated, within 28 days of the date of the return which is shown on the front of the form.

There is an annual document-processing fee of £30 (or £15 for users of the Electronic Filing or WebFiling services), which must be sent to Companies House with the annual return.

Conversion of a private limited company to a public limited company

Both a private company limited by shares and an unlimited company

Unlimited Company

An unlimited company or private unlimited company is a hybrid company incorporated either with or without a share capital but where the liability of the members or shareholders is not limited - that is, its members or shareholders have a joint, several and unlimited obligation to meet any...

with a share capital may re-register as a plc., but a company without a share capital cannot do so.

A private company must pass a special resolution that it be so re-registered and deliver a copy of the resolution together with an application form to the Registrar. The resolution must also:

alter the company's memorandum so that it states that the company is to be a public limited company,
increase its share capital to the statutory minimum of £50,000,
make any other alterations to the memorandum so that it conforms to that required for a public limited company,
make any required alterations to the articles of association of the company.

The private company if it does not already have sufficient issued share capital must issue £50,000 in shares a minimum of 25% part paid.

Conversion of a public limited company to a private limited company

In some jurisdictions a public limited company may re-register as a private limited company or private unlimited company

Unlimited Company

at any time with few formalities.

A court may also order a public company to re-register as private on approving a 'minute of reduction' of share capital which results in the issued share capital falling below the statutory minimum. In such a case the court will also specify alterations to the company's memorandum

Memorandum

A memorandum is from the Latin verbal phrase memorandum est, the gerundive form of the verb memoro, "to mention, call to mind, recount, relate", which means "It must be remembered ..."...

and articles. A special resolution to re-register is not required.

External links

Companies Act 2006, Office of Public Sector Information
Office of Public Sector Information
The Office of Public Sector Information is the body responsible for the operation of Her Majesty's Stationery Office and of other public information services of the United Kingdom...
Companies House guide to company formation

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.