Public Limited Company (aka. PLC)

1. Public Limited Company (aka. PLC) By: Omar, Abed and Anila

2. Formation of a PLC • Firstly, you need to register with the companies warehouse (www.CompanyWarehouse.co.uk) which aims to help entrepreneurs set up a limited company. • The company must have at least 2 directors for a PLC, under The Companies Act 2006 they do not allow any directors under the age of 16. Only directors from the age of 16-70 years of age.

3. Advantages • Limited Liability – Financial security that comes with the business when setup as a PLC. The shareholders will only be liable for any debt that the company accrues according to the level of their own investment and no more. Meaning that when you’re shareholders you only lose what you invested, the debt that you own will not have to be paid with personal assets. • Taxation and Tax Advantages – Limited companies are only taxed on their profits (usually at a rate of 20%) and they do not have to pay the higher (personal) tax rates placed on sole traders and partnerships. • Employee shareholders – employees can purchase shares on the stock market and become shareholders of the company, this rewards the employees with profits made as well as increasing their work ethic as they are more motivated in developing the company in-order to increase the money made as they have invested in the company.

4. Disadvantages • Cost - Some people will have you believe that a Limited Company is expensive to set-up as you require all different types of paper work as well as wasting time which can be used to do other things, thus making the company lose time which ultimately makes you lose money for setting up a plc, but this is a short-term loss. • Dilution of Powers – Due to the nature of Public Limited Companies, sometimes disputes will arise between directors and shareholders as their ideas of what is best for the company vary. Sale of shares increase company funds will therefore dilute the management, as more and more people have a say in how the company is run. There is also a risk (since companies can buy shares) that a takeover might occur this way. • Profit Sharing – Share profits to people who have invested in the company. • Loss of Confidentiality – Firms hate going public as they lose confidentiality in company operations and policies. For e.g. a company can be in trouble if all the competitors know what sort of technology or profitability the company is earning as they can spot weak points in a company and improve upon them and win the market.