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Public limited company

A public limited company (PLC) shares many of the characteristics and obligations of the  Private limited company but must meet in addition certain requirements:

* Issued shares to a nominal value of at least £50,000 of which at least 25

% must be paid up [(CA 2006 s.761];

* Articles of association for a public company [CA 2006 s.19; the Companies (Model Articles) Regulations 2008];

* At least two directors [CA 2006 s.154];

* A qualified company secretary (for qualifications required – see Companies House guidance GP1) [CA s.271]

The key advantage of a public company is that it is legally entitled to make an “offer to the public” of its shares or debentures [CA 2006 Part 20 Chap.1]. As mentioned in the case of private companies, the making of an invitation (even if not to the public) to acquire shares or debentures is strictly regulated and legal advice should be obtained before seeking to raise finance in this way.

Public companies are subject to more strict rules than private limited companies. In particular public companies:

* Must have their accounts audited (“small” private companies may benefit from an exemption from audit);

* Must file accounts within six months (nine for a private limited company);

* Share capital not paid in cash must be valued by a qualified auditor subject to certain exceptions (CA 2006 Part 17 Chaps. 5-6);

* May not pay a dividend except out of realised profits and comply with other rules relating to the maintenance of share capital;

* Are subject to the jurisdiction of the Takeover Panel which regulates any acquisition of “control” (i.e. 30% or more of the voting rights) over the company and enforces the Takeover Code.

In order to be legally entitled to do business and borrow money, a company which has been formed as a public company (as opposed to having converted from private company status) must obtain a trading certificate. To qualify for the certificate, the company must have an issued capital having a nominal value of at least £50,000 of which at least 25% is paid up plus the whole of any premium. [CA 2006 s.761]

For these reasons, public companies are generally suitable for the larger businesses or where the company wishes to make an offer to the public of its shares or debentures. this guide.

How to set up a public company

The steps are much the same as for a private limited company. However:

* There must be at least two directors;
* There must be a qualified company secretary;
* The company must adopt model articles of association for a public company or bespoke articles;
* Upon or after incorporation the company should issue shares of a nominal value of at least £50,000 of which at least 25% is paid up plus the whole of any premium;
* The company should apply for a trading certificate by completing and filing form SH50



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