Public limited companies (Plc) (Business and organisational characteristics)-FS

Question 1

Under which statute is the legal definition and requirement for public companies established in England and Wales?

Answer 1

The legal requirements for public companies are set out in the Companies Act 2006, including rules on naming, share capital, and public offerings.

Question 2

What is the naming requirement for a public limited company under the Companies Act 2006?

Answer 2

According to Section 58(1) of the Companies Act 2006, a public company must have a name that ends with “Public Limited Company” or “PLC.”

Question 3

What is the minimum allotted share capital required to become a public company?

Answer 3

Under Section 763(1)(a) of the Companies Act 2006, a public company must have an authorized minimum allotted share capital of £50,000 based on the nominal value of the shares.

Question 4

Why do many companies aim to become public limited companies?

Answer 4

Becoming a PLC enhances a company’s reputation and enables it to offer shares to the public, opening access to a broader pool of investment capital.

Question 5

What restriction is imposed on private limited companies regarding public share offerings?

Answer 5

Section 755 of the Companies Act 2006 prohibits private companies from:
(a) Offering securities to the public, and
(b) Allotting securities with a view to offering them to the public.

Question 6

What key advantage do public companies have over private companies in raising finance?

Answer 6

Public companies can issue shares to the public, which provides access to wider and potentially unlimited investment sources—a right not available to private companies.

Question 7

What is the regulatory trade-off of becoming a public limited company

Answer 7

Public companies are subject to extensive rules and disclosure obligations, including publishing information about their directors and corporate affairs, to protect the public from financial risk.

Question 8

What document must a public company issue to raise capital from public investors?

Answer 8

The company must comply with statutory obligations and disclose extensive information to lawfully issue shares to the public, including meeting share capital thresholds.