The initials plc after a UK or Irish company name indicate that it is a public limited company whose shares may be offered for sale to the public. The designation plc or PLC (either form is acceptable) was introduced in the UK by the Companies Act 1980, and in the Republic of Ireland by the Companies (Amendment) Act 1983. In the Republic of Ireland, the initals "cpt" (meaning "cuideachta phoiblí theoranta") may be used instead also, but this is rarely the case. Certain public limited companies incorporated under special legislation (mainly nationalised concerns) are exempt from carrying the letters plc or cpt.


When a new company is incorporated in either England and Wales or Scotland, it must be registered with Companies House, which is an Executive Agency of the Department of Trade and Industry. In the Republic of Ireland, the equivilant body is the Companies Registration Office, Ireland, Northern Ireland also has a Registrar of Companies. Other types of company are the limited company, private limited company and the rarely-used unlimited company; the latest form of company introduced in 2001 is the limited liability partnership (LLP).


When forming (or creating) a PLC there must be at least £50,000 worth of share capital of which at least 25% must have been paid for. While it is not compulsory for a PLC to "float" its shares (some PLCs retain ownership of all their shares, maintaining the PLC designation for the extra financial status) many do and their shares are usually traded on either the London Stock Exchange or the Alternative Investments Market (AIM). Irish public limited companies usually trade on the Irish Stock Exchange, though many also list on the LSE, or more rarely, the AIM. Public limited companies are able to obtain more capital than other firms due to the share sales and also banks are more likely to give out loans to them as they have better credit.


See also:   


List of UK public limited companies      

List of top 1000 PLCs (

Categories:   Types of companies







1. What is share capital?

When a company is formed, the person or people forming it decide whether its members' liability will be limited by shares. The number of shares which make up the division of the company must be stated in its memorandum of association (one of the documents by which the company is formed).  The Memorandum of Association :

  • the amount of share capital in £ pounds, the company will have; and

  • the division of the share capital into shares of a fixed amount: £1, £0.10p, etc nominal value per share.

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 own shares and the number of shares each will own. These people are called the subscribers.

2. What is authorised capital?

The amount of share capital stated in the memorandum of association is the company's 'authorised' or 'nominal' capital.

3. Is there a maximum and minimum share capital?

There is no maximum to any company's authorised share capital and no minimum share capital for private limited companies. However, a public limited company must have an authorised share capital of at least £50,000 (and, if it is trading, issued capital of £50,000 - see question 5).

4. Can a company alter its authorised share capital?

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.

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.

For information about resolutions, see our booklet, 'Resolutions'.

5. What is issued capital?

Issued capital is the value of the shares issued to shareholders. This means the nominal value of the shares rather than their actual worth. The amount of issued capital cannot exceed the amount of the authorised capital.

A company need not issue all its capital at once, but a public limited company must have at least £50,000 of allotted share capital. Of this, 25% of the nominal value of each share and any premium must be paid up before it can start business or borrow.


6. Getting a 'Certificate to commence business and borrow'

In order to be able to issue shares for sale by the public, a newly formed plc must obtain a trading certificate from Companies House.  To obtain a trading certificate, a new company incorporated as a plc, must deliver a statutory declaration on Form 117 confirming that its share capital is at least the statutory minimum. The Registrar will then issue a certificate entitling it to do business and borrow - see the booklet, 'Company Formation' for more information.

7. What does the allotment of shares mean?

'Allotment' is the process by which people become members of a company. Subscribers to a company’s memorandum are deemed to have agreed to take shares on incorporation and the shares are regarded as 'allotted' on incorporation.

Later, more people may be admitted as members of the company and are allotted shares. However, the directors must not allot shares without the authority of the existing shareholders. The authority will either be stated in the company's articles of association or given to the directors by resolution passed at a general meeting of the company.

8. What type of resolution is required to allot shares?

Any public or private company with share capital may give authority by ordinary resolution. The authority must be for a fixed period of up to five years. Any ordinary resolution giving, varying, revoking or renewing an authority to allot shares must be delivered to Companies House within 15 days of being passed.

A private company with share capital may instead pass an 'elective resolution', to give, or renew, an authority. This authority can be for any fixed period, which may be longer than five years. It can also be for an indefinite period. An elective resolution must also be delivered to Companies House within 15 days of being passed.

9. A company must notify the Registrar when an allotment of shares is made within one month of the allotment of shares.  


A return on Form 88(2) must be delivered to Companies House.

If the shares are to be paid for in cash, you must enter details of the actual amount paid (or due to be paid) on the form. Do not include any amount that is not yet due for payment on a partly paid-up share. The amount will reflect the nominal value of the shares and any premium.



10. Nominal value and share premium

A company's authorised share capital is divided into shares of a nominal value. The real value of the shares may change over time, reflecting what the company is worth, but their nominal value remains the same. When the company sells shares for more than their nominal value, the actual sum paid will be in two parts - the nominal value and a share premium. The share premium must be recorded separately in the company's financial records in a 'share premium account'.

If the shares are to be paid for otherwise than in cash (see questions 11 and 13), the amount entered on the form against ‘Amount (if any) paid or due on each’ must be ‘nil’ or ‘0.00’.

11. Must shares be fully paid-up at the time of allotment?

No. Payment may be deferred until later. However, shares allotted in a public company must be paid-up to at least a quarter of their nominal value and the whole of any premium (except that this does not apply to shares allotted under an employees' share scheme).

As a general rule, a company may allot bonus shares to members as fully paid-up. A company which has funds available for the purpose may also pay up any amounts unpaid on its shares.

A company's shares must not be allotted at a discount (that is, for an amount less than the nominal value).

12. Must payment for shares be in cash?

No, it can be in goods, services, property, good will, know-how, or even shares in another company. The latter is often used when one company takes over another. It also includes cash payments to any person other than the company allotting the shares.

Public companies are more restricted in what they may accept in payment for shares and non-cash payments must be valued before shares are allotted (except in the case of bonus issues, mergers or arrangements whereby shares in another company are cancelled or transferred to the company). A copy of the valuation report must be delivered to Companies House with Form 88(2).

Generally shares may be allotted for payment:

  • wholly for cash;

  • partly for cash and partly for a non-cash payment; or

  • wholly for a non-cash payment.

A share is paid up in cash if the amount due is received by the company (in cash or by cheque, or the company has been released from a liquidated liability) or an undertaking has been given to pay cash to the company at a future date. ‘Cash’ includes foreign currency.



13. Must I send any more information if allotments include non-cash payments?

Yes. Form 88(2) must show the extent to which the shares are to be treated as paid-up. This must be stated as a percentage of the total amount payable in respect of the nominal value and any premium.



14. Calculating the extent to which shares are paid-up

If an allotment is partly for cash and partly for a non-cash payment, then the extent to which the shares are treated as paid-up must include the cash and non-cash elements. For example, a £1 share allotted for 50p in cash ( either paid or due and payable ) and 50p in services is still 100% paid-up. If the shares were allotted at a premium, the percentage includes the nominal value of each share and the premium.


Form 88(2) must also include a brief description of the non-cash payment for which the shares were allotted (for example, 'in return for the transfer of 100 ordinary shares of £1 in XYZ limited' or ‘capitalisation of reserves’). It must be accompanied by the written contract under which title of the shares is constituted.

If there is no written contract, a Form 88(3) must be delivered to Companies House with Form 88(2) within one month of the allotment. Form 88(3) is not acceptable when there is a written contract.

15. Stamp duty

Acquiring shares for a non-cash payment involves the transfer of property, which may amount to a chargeable transaction under the Stamp Act.  Please note: For contracts entered into after 30 November 2003, there is no need to have the written contract or Form 88(3) stamped by the Inland Revenue.


Stamp duty is a tax levied on the purchase of property and shares. When buying property (houses or land), the stamp duty is calculated as a percentage of the value of the property, so the larger the property the higher the stamp duty. Properties that are valued below £60,000 are exempt and there is a ceiling of 4% of the value of any properties worth over £500,000.





Purchase Price or

Duty  £. p


Up to 1,000


£1,001 to £2,000


£2,001 to £3,000


£3,001 to £4,000


£4,001 to £5,000


£5,001 to £6,000


£6,001 to £7,000


£7,001 to £8,000


£8,001 to £9,000


£9,001 to £10,000


Over £10,000

0.5% duty rounded to next £5





There are many benefits to being a public company.  Some of the most compelling advantages can include:


1. Access to capital


Being a public company can give investors more confidence in investing in your company. When your stock has a public price, it gives you a benchmark price to raise capital. Any potential investor can go on the Internet or call a broker and get a quote of your company’s stock price. Some public companies then give investors who buy stock directly from the company in a private placement a discount from the public trading price (if they are willing to hold the stock for one year). This gives this investor even more of an incentive to invest.


Money raised can be used for a variety of purposes including; growth and expansion, retiring existing debt, corporate marketing and development, acquisition capital and corporate diversity. Once public, a company's financing alternatives are greatly increased. A publicly traded company can go to the public markets for capital via a stock or bond issue, and may also convert debt to equity.


2. Liquidity


By going public, a company can create a market for its stock. This gives the company a greater opportunity to sell shares of stock to investors. In general, stock in a public company is much more liquid than stock in a private enterprise. Liquidity is created for the investors, institutions, founders, and owners. Investors in the company may be able to buy or sell the stock more readily. Oftentimes institutional investors and venture capitalist will require a company to become public before committing funds.


Ownership of stock in a public company may help the company's principals to borrow more easily and eliminate personal guarantees. Liquidity can also provide an investor or company owner an exit strategy, and portfolio diversity. Liquidity is one of the many reasons why public companies are typically valued so much more than a private company.


3. Mergers and Acquisitions


Once a company is public and the market for its stock is established, the stock can be considered as valuable as cash when acquiring other businesses.  A public company usually increases a company's valuation leading to a variety of opportunities for mergers and acquisitions. A public company also has the advantage of using the market's valuation when exchanging stock in an acquisition.


Securities and Exchange Commission disclosure requirements offer the public more confidence because in annual reports the company outlines its financial condition and corporate strategy which encourages corporate growth, development and merger activity. In addition to acquiring companies many other assets can be purchased with stock.


4. Increased Valuation


The market value of a public company is normally substantially higher than a private company with the same structure in the same industry. Converting a private company to a public company results in a substantial increase in value to owners. Statistics published by the United States Chamber of Commerce show that sellers of private companies receive an average of 4 to 6 times their net earnings. By comparison, public companies sell at an average of 25 times their net earnings. High tech companies are valued even higher.


Investors in a private company will discount the value of its equity securities by reason of their "non-liquidity" - the lack of a ready, public market for them. Thus, public companies often are valued so much greater than private, similar companies in the same industry. The availability of other alternatives to raising capital permits a public company greater leverage in its negotiations with both institutional and individual investors. Many institutional and individual investors prefer investing in public companies since they have a built-in "exit," that is, they can sell their stock in the public market. Many companies that were private and about to be purchased went public to be purchased at a much higher price.


5. Compensation


Many companies use stock and stock option plans as an incentive to attract and retain talented employees. It is increasingly common to recruit and compensate executives with a combination of salary and stock. This reward could be deemed even more desirable when the company is publicly traded. Stock can be instrumental in attracting and keeping key personnel. Also, certain tax advantages are a consideration when issuing stock to an employee. Being public can help to create a market for the company's stock. This market can result in liquidity and reward for the company's employees.


A stock plan for employees demonstrates corporate goodwill and allows employees to become partial owners in the company where they work. An allocation of ownership or division of equity can lead to increased productivity, morale and loyalty. This type of compensation is a way of connecting an employee’s financial future to the company's success.


6. Prestige


A public offering of stock can help a company gain prestige by creating a perception of stability. The status of being a public company can have a dramatic effect on a company's profile, perceived competitiveness and stability. This perception can lead to expanded business relationships and added confidence in the consumer.


A company's founders, co-founders and managers gain prestige from being associated with a public company. Prestige can be very helpful in recruiting key employees, marketing products and services to your target market. When sharing ownership with the public, you enhance the company's reputation and increase its business opportunities. Your company can gain additional exposure and become better known.


Often a company's suppliers and consumers become shareholders as well as joint venture partners, which may encourage continued or increased business. Once public, lenders and suppliers may perceive the company as a safer credit risk; this will enhance the opportunities for favorable financing terms. Indeed, the suppliers' and customers' perception of company success is often a self-fulfilling prophecy. Many people have called it the ultimate status symbol.


7. Personal Wealth


One of the most important benefits of a public offering is the fact that the company's stock eventually becomes liquid, offering rewards and financial freedom for the founders and employees.


A public market for stock provides a potential exit strategy and liquidity to the investors. A psychological sense of financial success can be an added benefit of going public. A public company can enhance the personal net worth of a company's shareholders. Even if a public company's shareholders do not realize immediate profits, publicly-traded stock can be used as collateral to secure loans. Many feel it makes sense at an appropriate time for investors and entrepreneurs to cash out some of their equity in order to diversify their holdings or to enjoy life. Employees and officers have two ways to add to their wealth: by receiving a salary and selling stock or trading the stock for another type of asset.


8. Estate Planning


The public company can be utilized as part of a retirement strategy for business owners and allows them to pass assets to heirs. A business owner may wish to transfer the accumulated value in a business to relatives who have no interest in or aptitude for running it, dividing up property among family members, and settling up an estate.


9. Publicity


Public companies are more likely to receive the attention of major newspapers, magazines and periodicals than a private enterprise. The proper use of press releases, interviews or news stories can increase investor awareness, shareholder value and demand for the stock. A strong ad campaign coupled with media initiatives can potentially increase sales and revenue.


The publicity received from being public can encourage investments from the public, new business development and strategic alliances. Analyst reports and daily stock market tables contribute to further awareness by consumers and the financial community. By virtue of being a public company your company's story can more easily get out to the world. This allows for investors who would not invest in private companies but will invest in public companies to find out about your company.


The publicity that a public company may receive can attract the attention of potential partners or merger candidates. Because the financial condition of a public company is subject to the scrutiny of the Securities and Exchange Commission reporting requirements, existing or future business relationships are strengthened. Many private firms do not appear on the radar screen of potential acquirors. Being public makes it easier for other companies to notice and evaluate your company for potential synergies.





Becoming public without an underwritten offering has the following benefits:


  • Active market making, aided by the limited amount of available public stock, can produce a strong and stable trading price for the public company’s securities.


  • The registration statement can also include securities of the founders, corporate offices and other shareholders.


  • If the registration included warrants, the public company can expect to receive proceeds from the exercise of those warrants when the United States trading price of its common stock exceeds the exercise (strike) price of the warrants.


  • Typically only a small percentage of the private company’s shares are registered. This serves to preserve the corporate ownership of the existing shareholders for future financial transactions.


  • The company prepares the stock market for a later public offering later on, which typically occurs at a stock price greater than could have been done initially.


  • Classes of preferred stock can be issued for special purposes.


  • Principals and initial shareholders of the private company can include their securities in the registration statement. This can allow them to then sell their securities in the public market.


  • If the private company is an overseas company, it may not want to become a United States company. The overseas company can have their securities traded in the United States on a United States stock exchange without requiring them to become a United States company or subsidiary.


  • The market value of a public company is often substantially higher than a private company with the same structure in the same industry.


  • Capital is easier to raise for public companies because the stock has market value and can be traded


  • The public trading price of the public company’s securities serves as a benchmark for the offer price of a subsequent public or private securities offering


  • Acquisitions can be made with stock since publicly traded stock is viewed as currency for mergers and acquisitions


  • Form S-8 stock can be issued for officers, directors, and consultants


  • If the offering includes warrants, the new company can receive proceeds from the exercise of those warrants if the trading price of its common stock exceeds the exercise price of warrants.



The Source by Greyworld, in the new LSE building


New LSE building Paternoster Square


This material and any views expressed herein are provided for information purposes only and should not be construed in any way as an endorsement or inducement to invest in any specific program. Before investing in any program, you must obtain, read and examine thoroughly its disclosure document or offering memorandum.



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