Establishing a UK Public Limited Company
General Overview
A UK Public Limited Company, commonly referred to as a ‘PLC,’ is a type of company legally authorized to offer its shares to the public. While they have the option to do so, it’s not mandatory, providing flexibility for when the need arises. It’s important to note that PLCs are less common in the UK, with private limited companies comprising over 95% of registered businesses. These two company types exhibit distinctions and specific requirements:
- UK Public Limited Company requires a minimum of two shareholders, whereas private limited companies can function with just one.
- A minimum of two Directors must be registered for a PLC, while a private company requires only one.
- PLCs must submit their company accounts to HMRC within six months of the financial year’s conclusion, while private companies are granted a nine-month submission period.
- A fully qualified Company Secretary is mandatory for a PLC, whereas a private company’s secretary need not hold specific qualifications.
Advantages of a UK Public Limited Company (PLC)
There are several benefits associated with establishing a public limited company, particularly if your aim is to raise capital for your business. PLCs can secure share capital from both new and existing investors, and shares can be bought and sold, provided they are quoted on a stock exchange.
Most significant businesses operate as incorporated companies, enabling the expansion of your business through acquisitions by offering shares to another company’s shareholders. This approach not only enhances your business expertise but also elevates your company’s professional and prestigious public image.
A key benefit of incorporating as a PLC is the establishment of a separate legal identity for your company. This legal separation ensures limited liability protection, with members typically liable only for unpaid amounts on their shares in the event of business failure. Incorporation also safeguards your company’s name, as once registered, no one else can trade under the same company name.
Opening a Public Limited Company (PLC) in the UK
Company Information
Type of Company for International Trade and Investment
It’s important to note that there are two types of PLCs. One type has shares quoted publicly and is listed on an international stock exchange. The other type operates as a private limited company. Regulations governing quoted PLCs differ from those discussed in this document, and specialized advice is recommended.
Procedure for Incorporation
To establish a PLC, you need to submit a Memorandum and Articles of Association, a Declaration of Compliance, and a Statement of the First Directors and Secretary, along with notification of the Registered Office’s location and the requisite fee to Companies House.
Restrictions on Trading
Yes, certain restrictions apply to specified groups, including banking, insurance, financial services, consumer credit, and related services. A newly formed PLC is not permitted to commence business or exercise borrowing powers until it holds a certificate issued under section 117 of the Companies Act 1985, confirming that the company has issued share capital of at least the statutory minimum. Once issued, this certificate serves as proof that the company is entitled to conduct business and borrow.
Powers of the Company
A company incorporated in the United Kingdom possesses the same legal powers as a natural person.
Language of Legislation and Corporate Documents
Legal documents and legislation are available in English or Welsh.
Registered Office Requirement
A registered office must be maintained within the United Kingdom.
Name Restrictions
Specific limitations exist for company names, including the following:
- Any name that is identical or too similar to an existing company.
- Any name considered offensive or implying criminal activity.
- Any name suggesting royal patronage or an association with the UK’s Central or Local Government.
Names Requiring Consent or License
Certain names, primarily those containing words like “assurance,” “bank,” “benevolent,” “building society,” and more, typically necessitate a license or other government authority’s approval. This includes their foreign language equivalents.
Language of Documentation
While the company’s name can be in any language, the documentation must be in English. If the company is incorporated in Wales, documentation in Welsh is acceptable.
Disclosure of Beneficial Owner to Authorities
Generally, no disclosure is required. However, specific situations may necessitate disclosure for accounting purposes. Company accounts must be filed and are accessible for public inspection.
Compliance Details
Authorised and Issued Share Capital
The minimum authorized share capital is £50,000. The issued share capital is also £50,000, with a minimum of £12,500 required to be paid up. In case of liquidation, the entire £50,000 must be paid.
Permitted Classes of Shares
While the standard category is ordinary shares, depending on the company’s circumstances, preference shares, deferred shares, redeemable shares, and shares with or without voting rights may be permitted.
Taxation
Corporation Tax rates depend on your company’s profit level. Profits over £250,000 are taxed at the main rate of 25%, while profits below £50,000 are subject to the ‘small profits rate’ of 19%. Profits between £50,000 and £250,000 may be eligible for ‘Marginal Relief.’ These thresholds are adjusted for short accounting periods and the total number of associated companies. Obtaining the lower tax rate can be challenging for UK companies owned outside the UK.
Double Taxation Agreements
The United Kingdom has an extensive network of double tax treaties with many other countries.
Financial Statement Requirements
All UK companies, whether actively trading or not, are obliged to file statutory form accounts with the Registrar of Companies and the Inland Revenue. These accounts should include a directors’ report, a balance sheet, a profit and loss account (or income and expenditure account if the company is not trading for profit), notes to the accounts, and group accounts if applicable.
License Fee
No specific license fee is required.
Directors
A public company must have a minimum of two directors, who can be natural persons or corporate bodies. They may be of any nationality and are not required to reside in the UK.
Company Secretary
A qualified company secretary must be appointed. The company secretary can be a natural person or a corporate body, and their nationality and residence do not need to be in the UK.
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