A Public Limited Company is also known as Publically Held Company is a company is a kind of public company that is registered under the Companies Act 1980 in the UK, with a statutory minimum capital requirement and offers shares to the public with the condition of limited liability.
Some of the significant and intriguing advantages of having a Public Limited Company are as follows:
- A Public Limited Company can raise additional capital by issuing shares to the public. Since anyone can invest in the company, a higher capital can be raised in comparison to a Private Limited Company.
- The shares of a PLC can be bought and sold by anyone. A Public Limited Company is open to raising capital through issuing public shares; this means that people buying the shares are also buying the part of the risk. Hence for a PLC, the risk is spread out.
- With the higher potential of raising funds, Public Limited Company has a high potential for growth and expansion. Hence a PLC can buy more products, pay off debt, undertake new projects and raise adequate funds for Research and Development.
- As the name suggests, there is Limited Liability for shareholders. This means that the liability of the shareholders towards the company in an adverse financial condition is restricted to the value of their shares.
- A Public Limited Company caters to the interests of the public at large. Hence the top management always actively strives to enhance its activities by employing experts and professionals to effectively manage its operations.
- A Public Limited Company is democratic in nature. The directors cannot dictate decisions upon the company since the right to decision making is also vested in the hands of the shareholders.
- A Public Limited Company holds high credibility in the market. This is why financial institutions and banks easily give loans to a PLC.
- PLCs are separate Legal entities. This means they are separate from its owners and can continue to exist even in the event of a shareholder’ retirement and death. Its Separate Legal Entity status permits it to own, sell, rent property, sue and get sued, borrow capital, etc. in its own
- PLCs shares are freely transferable; this leads to higher liquidity for its shareholders.
It is advisable to access the flaws before investing your hard earned money, valued time and extensive effort in a PLC. Some of the disadvantages of a Public Limited Company are sighted below:
- The financial requirement to set up a PLC is much higher in comparison to other company structures. In the UK a Public Limited Company should have a share capital of at least 50000 Euros and at least a quarter of this is required to be paid up. Since running a PLC is a complex process. You have to bear a high cost here too.
- A PLCs large size may cause management issues such as industrial relations problems and slow decision making.
- A Public Limited Company faces the issue of lack of secrecy. It has to involve the general public in decision making and has to maintain transparency of its operations. All its accounts have to be audited, and complete information about the company’s performance has to be available for anyone looking for it.
- Public Limited Companies are governed by a large number of rules and regulations and Acts. It has to undergo a large list of legal formalities. The degree of external control on the company’s internals results in lower autonomy in the director’s
This article has been crafted particularly to help you weigh the advantages and disadvantages of setting up a Public Limited Company. With the above information, you can now decide whether or not a PLC is an answer to your quest. You should also have a look at other company types like the Limited by Guarantee.