In the UK, public limited companies are the type of limited companies which are legally permitted to offer their shares for sale to the general public to raise funds for business. In short, a public limited company is called as PLC. It is not compulsory for a PLC to provide its share to the public all the time, but, this is an option available whenever there is a need.
Formation of public limited companies is very rare as compared to private limited companies in the UK. More about 95% of limited companies are private limited companies. Both the public and private limited companies have several differences; also there are certain requirements which a public limited company requires to match.
Every company has a separate legal identity. Having a separate identity from the shareholders and management means, you have protection through incomplete liability. This is an important aspect of registration. It means members are liable to pay only for the unpaid amount on their shares if the business fails.
Becoming incorporated means that your company name is protected. Once registered in the company index name, no-one else can use it to trade under. To protect trading names, the sole traders and partnerships have trade legislation. As a PLC, the name of your company name will remain your liability.
Sole trader and partnerships have to pay the basic or high rate income tax. Whereas public limited companies have to pay corporation tax rates, currently, the rate is fixed to 20%. There are tax allowances and tax-deductible costs which can be offset against the profits of the company for higher tax savings.
Once you have formed a public limited company, there is a higher sense of continuity for your company. The company will remain open and continue smoothly, even if something unfortunate happens to the directors, employees, or management of your company.
The one and the only way to stop a company to operate is when it is wound up or be put on hold by the Registrar of the company or court.
Although there are profitable advantages of running a business as a PLC, there are some distinct disadvantages. These disadvantages are most important to think about if you are running a company as a private limited company and thinking about changing it to a public limited company. The most important points you have to consider are discussed further.
There are many liabilities to start a PLC, i.e.
To protect public investors, you have to follow several regulations and controls given below:
will govern the value of the company through the trading of the company's shares and will represent the views of the market about the performance of the company time-to-time.
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