how a public limited company plc works
a plc designates a company that has offered shares of stock to the general public the buyers of those shares have limited liability meaning that they cannot be held responsible for any business losses in excess of the amount they paid for the shares 2in the u k a plc operates along similar lines as a public corporation in the u s its operations are regulated and they are required to publish periodic reports to shareholders and prospective shareholders on its true financial health 3requirements for a plcu k company law says that a plc must have the plc or public limited company designation after the company name and minimum share capital of 50 000 45 like a publicly traded company in the u s plcs offer various types of shares such as ordinary and cumulative preference shares ordinary shares of a plc are similar to common stock issued by u s corporations cumulative preference shares are akin to preferred stock in the u s other key requirements for a plc include offering shares appointing directors and adhering to registration requirements 6the largest plcs make up the financial times stock exchange 100 index known as the footsie advantages and disadvantages of a plcthe biggest advantage of forming a public limited company plc is that it grants the ability to raise capital by issuing public shares a listing on a public stock exchange attracts interest from hedge funds mutual funds and professional traders as well as individual investors that tends to lead to increased access to capital for investment in the company than a private limited company can amass on the other hand there s much more regulation for a plc in the u k than there is for a public corporation in the u s they are required to hold annual general meetings open to all shareholders and are held to higher standards of transparency in accounting 7 because they re public they re also vulnerable to pressure from shareholders and takeover bids from rivals by becoming a plc the company is given greater access to capital and shareholders are offered liquidity these are similar benefits of a company in the u s going public on the downside becoming a plc means more scrutiny and required reporting the company will have more shareholders and the value of the company could become more volatile as it is determined by the financial markets u k companies can raise more capital by being a plc becoming a plc allows shareholders liquidity increased ability to raise future capital and make acquisitions by offering shares to target companies increased scrutiny and regulationlarger number of shareholders to be accountable tovolatility in valuation increases as the company is beholden to financial markets public limited company plc vs private limited company ltd a plc is a public company in the u k meanwhile there are private limited companies ltds which are private companies in the u k shares of a private limited company are not offered to the general public 8private companies are still incorporated generally with the companies house these companies are still required to have legal documents to form the business private companies must have at least one director to raise capital via a public investment in the u k the company must be a plc plcs are like ltds except they are publicly traded with shares that can be freely sold and traded on a stock exchange meanwhile plcs must have at least two directors and hold annual shareholder meetings 910