Have you recently come across the term Public Limited Company (PLC)? It’s a kind of company structure in which the business is collectively owned by the shareholders, and managed by directors. It means the business exists as its own so there’s guaranteed protection if anything happens.
Usually, a PLC company indicates PLC after its official name (instead of Ltd. or Inc.), so that people know. And like other forms, PLCs are also regulated. They publish financial reports and guide investors in making the best decisions.
So if you’re interested to invest in a PLC, here are things you should know!
1. Is it private or public?
As the name suggests, PLCs are private. On the other hand, private limited companies (LTDs) are handled privately. However, private companies are still required to disclose legal documents as a form of business.
Since PLCs are owned by the shareholders, they’re required to hold annual shareholders’ meetings which are regulated by at least two directors.
2. All companies listed on the Stock Exchange are PLCs
Since PLCs essentially need to get more attention from the general public, it’s one of the reasons why they’re included in the Stock Exchange. Additionally, the public will get to know more information about the company.
Aside from that, the company will also get to raise capital being exposed to the public and selling shares. Through this, they can accomplish more projects and develop their business.
Another reason why PLCs are included in the Stock Exchange is that offering investors liquidity increases the demand. When that happens, the value of the shares also increases over time. Besides, it’s the best way to let investors know that they should be trusted.
So when you’re looking for a company to invest in, you can check first if they’re listed on the Stock Exchange.
3. PLC legally offers shares to the general public
PLCs legally offer shares to the general public since it enables them to reach a wider range of investors. Additionally, they provide the balance of being transparent and holding accountability to protect the investments.
4. There are specific requirements to become a PLC
If a company aspires to become a PLC, there are certain legal requirements needed to accomplish. Some of these requirements are:
- The minimum share capital based on the Companies Act of 2006 is £50,000.
- There should be articles of association that are also based on the format given by the Companies Act of 2006.
- There should be at least two directors. In case there are exactly two directors, one can act as the secretary.
- There should be at least two shareholders.
- There should be a printed document about the company and other essential information.
- Before trading, a certificate from the Registrar of Companies should be obtained.
- There should be an annual financial report filled out regularly.
However, even if a company complies with the aforementioned requirements, the process of approval may take a while. In addition, achieving the bare minimum requirements doesn’t automatically mean that the company will be approved as a Public Limited Company (PLC).
5. There are advantages
As mentioned, being a PLC enables a business to raise capital and improve its overall image. Moreover, since the number of traders increase through the years, this can also help the PLCs attract their interest.
- So if you’re interested to trade PLCs, here are some of the advantages:
- Share sales are one of the sources to raise capital.
- The capital can pay off debts.
- The general public becomes aware of the branding of the company.
- The availability of public information allows the opportunity to find business partners.
- More investors mean that the company is stable and able to protect its investments.
6. And also disadvantages
If there are advantages, there are also disadvantages. Below are the disadvantages of Public Limited Companies (PLCs):
- It’s required to conduct annual general meetings
- If there are two directors and the other one can no longer fulfil their duties, it can have negative implications for the company.
- Since anyone can buy shares, it can be hard to maintain the unity of the company.
- Shareholders may act differently on news, which can greatly affect the share price.
- Unlike private companies, PLCs are audited regularly.
- There can be a large number of shareholders to hold accountable to the entire company.
7. How to invest?
The simplest way to invest or trade shares in PLCs is through a brokerage. You can start by looking for a credible broker. But if you already have one, ensure that they’re authorised to trade on the stock exchange where the specific PLC you want to invest belongs to.
Of course, you must have enough information and research about the PLC you want to trade. Next, check if they have the platform you prefer, whether it’s cTrader or MetaTrader.
Once everything is set according to your preference, you can now place an order (including the number of shares, price, and type of order). Finally, monitor your trades, and follow your trading plan thoroughly.
We hope this article helps you get started with getting to know Public Limited Companies (PLCs). Don’t forget to share your thought about PLCs by leaving a comment below!
