Public limited company

A public limited company (legally abbreviated to plc with or without full stops) is a limited liability company that sells shares to the public in United Kingdom company law, in the Republic of Ireland and Commonwealth jurisdictions.

It can be either an unlisted or listed company on the stock exchanges. 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. [1]

However, certain public limited companies (mostly nationalised concerns) incorporated under special legislation are exempted from bearing any of the identifying suffixes. Some companies in Finland, referred to as "Osakeyhtiö (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.[2]

Contents

Registration

When a new company incorporates in England and Wales or in Scotland, it must register with Companies House, an Executive Agency of the Department for Business, Innovation and Skills. In Northern Ireland, prior to October 2009, companies in that jurisdiction were registered with the Northern Ireland Executive's Department of Enterprise, Trade and Investment, companies registrations are now handled by the Companies House like rests of United Kingdom.

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:

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 (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:

  1. Held the office of secretary or assistant or deputy secretary on 22 December 1980, or
  2. For at least three of the five years before their appointment, held the office of secretary of a non-private company or
  3. Is a barrister, advocate or solicitor called or admitted in any part of the United Kingdom, or
  4. 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
  5. 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 (unless its articles of association require a special or extraordinary resolution). A copy of the resolution – and notice of the increase on Form 123 – must reach 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:

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,[3] companies are usually formed through a Company Formation Agent.[4]

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:

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

Conversion of a private limited company to a public limited company

Both a private company limited by shares and an unlimited company 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:

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

See also

Notes

  1. ^ s. 58(2) Companies Act 2006
  2. ^ "Articles of Association." Finnair. Retrieved on 18 February 2011. "Section 1 The name of the Company is Finnair Oyj, and its domicile is Helsinki. The name of the Company in Swedish is Finnair Abp and in English Finnair PIc."
  3. ^ Companies House website
  4. ^ Companies House website

External links