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How to Register PLC in Great Britain

If you plan to set up a business in the UK, you can choose from various types of companies. Each of them has its advantages and disadvantages.

A savvy entrepreneur would explore the common types of legal entities in Great Britain before choosing the most suitable one for their expectations and needs. This article explores one type of UK company, a public limited company (PLC).

What is a Public Limited Company (PLC)?

The main features are already in the name:

  • The capital of the company is funded, fully or partially, by offering shares to the general public.
  • Shareholders’ liability for the debt of the company is limited to the market value of the shares they hold.

However, the latter rule has an exception: the members’ liability may go beyond the values of the shares if the PLC takes a loan, and a shareholder undertakes to see it paid back.

Five Advantages of a Public Limited Company

The current number of public limited companies registered in the UK is over 100,000, according to the latest estimates. Entrepreneurs are attracted by limited liability and a few other advantages listed below:

  1. Increased financing
    As a rule, a major part of a PLC’s share capital is financed by selling shares on a stock exchange. The funds can be allocated to develop and launch new products, enter promising markets, and conduct research. In either case, the money is spent on making the business grow.
  2. Lower risk of losing control over your business as compared to a privately-owned company (LTD)
    If you want your private company limited by shares to develop, you will need to attract additional funds, and external investors will ask for registered shares in exchange for supporting your business. As a result, they might gain significant control over your business. The share capital of a PLC is fully or partially formed by trading shares on stock exchanges so the number of shareholders in a PLC is far higher than in an LTD while the risk to lose control is lower.
  3. Making your brand more prestigious and recognisable
    A public limited company with its shares traded on a stock exchange is considered a prestigious legal entity for multiple reasons. Registering your PLC in the UK increases brand awareness among investors, clients, and suppliers. Experienced British entrepreneurs claim their communication with partners has been facilitated and sales have significantly increased after them changing their company type to a PLC.
  4. Easier access to borrowed funds
    Banks regard companies listed on stock markets as more reliable borrowers compared to other types of UK companies; therefore, PLCs with shares traded to the general public can obtain additional funds more easily. As a rule, public limited companies get more favourable interest rates and repayment terms.
  5. Fostering business relationships
    It might be not obvious that any investor has a vested interest in seeing your business grow. But it is true because only then the share value and their dividends will increase. So your shareholders will help you develop business relationships with other companies so that your business, the business they have invested in, could grow.

Key Features of a Public Limited Company

A British PLC should comply with several requirements:

  1. At least two directors should be appointed. The company is run by a board of directors with a chairman.
  2. To set up a PLC, you need to have at least 2 shareholders. As you might easily guess, the ownership is divided among the shareholders. The number of shares a person holds determines the degree of their control over the PLC.
  3. The minimum share capital of a PLC should be GBP 50,000 and at least 25% of shares should have been sold prior to registration.
  4. A PLC should have a qualified company secretary.

The British law distinguishes between two types of shareholders:

  • Ordinary shareholders who buy shares on a stock market.
  • Initial shareholders who set up the PLC.

It is worth mentioning that British corporate law does not have any restrictions regarding the nationality or tax residency status of shareholders and directors of a PLC.

Accountability of a PLC

  1. Accounts of a PLC should be regularly audited and the report should be filed with Companies House once a year. The first report is to be filed no later than 18 months after the company was registered. 
  2. Any changes in a PLC, including changes to directors and shareholders, should also be reported to the Companies House once a year. 
  3. A tax return is to be filed with the tax authorities (HMRC) within 9 months after the end of the financial year and a corporate tax is to be duly paid.
  4. All shareholders must be invited to an annual general meeting where the audited accounts are discussed and the amount of dividends to be paid out is set.
  5. PLC’s directors are to fill in self-assessment tax returns annually and file them with the HMRC in due time.

An essential requirement to be mentioned separately is publishing annual accounts in the public domain with complete information about the profit, financial health and tax liabilities of the company.

Registering a PLC

If you plan to register a PLC, you first need to take the following steps:

  1. Create a name for your PLC, check its uniqueness with the tool provided by the Companies House and have it approved. Note that the company name should include “plc” at the end.
  2. Find a UK address to register your office.
  3. Gather all the required information about the directors: personal data and shareholding.
  4. Gather the relevant information about the initial shareholders: names, addresses, and number of shares issued.

Next, you would need to prepare your articles of association and a PLC memorandum:

  • If you apply online, the articles of association are generated online. If you file your application by post, you will need to use a template approved by the British authorities.
  • For your memorandum, you can also use a template, otherwise you might make up your own memorandum taking into consideration all the details of your business in Great Britain.

Once you have gathered all the documents and required information, you can register your PLC online on the website of the Companies House. If you prefer to do it the old-fashioned way, download an IN01 form, print it out, fill it in, and post it to the Companies House.

However, the setting up of a plc does not end with incorporating your company in the UK. You will also need to obtain a trading certificate; it will be issued once you have provided the required proof of paying 25% of the share capital and documents showing that your company complies with all the legal requirements. You will find an application form for a trading certificate on the government website.

The UK government has been doing their utmost to facilitate the incorporation of British companies. However, despite the low fees and quick turnaround (it takes only one day!), international entrepreneurs might face significant difficulties during the registration process of their business as they are not familiar with British law.

Experienced advisors from Imperial & Legal’s London team have developed three service packages for entrepreneurs: Standard, Standard Plus, and Imperial. They help resolve most issues a prospective entrepreneur faces in the UK – from providing a registered address and assisting with opening a bank account in Great Britain to offering business consultations and providing visa assistance for your international staff.

FAQ about registering a PLC in the UK

Do PLCs have any disadvantages?

Just as any legal entity type, a public limited company has several characteristics that can be regarded as disadvantages under certain circumstances:

  • A high requirement for the initial share capital.
  • A risk of a hostile takeover by competitors.
  • Stringent accounting and auditing requirements.
  • A duty to distribute profit among the shareholders in the form of dividends.

What is a so-called “hostile takeover”?

Since your company shares are traded on a stock market, a competitor can become a majority shareholder in your PLC to influence the decision-making process and in the end take over your business.

How can I initiate a PLC initial public offering process?

Your company should first be audited to demonstrate its financial health. Afterwards, you will need to prepare and file an application to the FCA (Financial Conduct Authority).

Afterwards, your application is forwarded to the preferred stock exchange (e.g. London Stock Exchange, LSE). Once it is approved, you will need to contact an investment bank which will assist you with gathering the required documents and preparing for the IPO.

What affects the value of a public limited company?

Though it might seem strange, the PLC company value can be impacted not only by its performance but also by the vulnerability of the stock exchange – both by the general trends and the negative narrative from the media and expert community. In some cases, the success of a PLC directly depends on the share value on the stock market.

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