1. WHAT IS A PUBLIC LIMITED COMPANY?

A public limited company is a company which is registered as such and complies with the following:

• it must state that it is a public limited company both in its memorandum and in its name. The memorandum must contain a clause stating that it is a public limited company and the name must end with "Public Limited Company" or "PLC" (or the Welsh equivalents "Cwmni Cyfyngedig Cyhoeddus” or "CCC").
• the memorandum must be in the form specified in Table F of the Companies (Tables A to F) Regulations 1985, or as near to that form as circumstances permits.
• it must have an authorised share capital of at least £50,000.
• before it can commence business, it must have allotted shares to the value of at least £50,000 a quarter of which, £12,500, must be paid up in cash. Each share allotted must be paid up to at least one quarter of its nominal value together with the whole of any premium.

For example, if a share with a nominal value of £1.00 is sold for £6.00 then it is said to have a premium of £5.00. This premium must be paid to the company together with a minimum of one quarter of the nominal value of each share. That is £0.25p (one quarter of the nominal value of a £1.00 share) plus £5.00 (the share premium) making a total payment of £5.25.

Further information about share capital is available in our notes for guidance "Share Capital" (CHN 30).

2. ARE THERE ANY OTHER RESTRICTIONS ON A PLC?

Yes. There are five main restrictions. These are:

• a newly formed PLC cannot commence business or borrow until it has obtained a certificate to do so from the Registrar of Companies under section 117 of the Companies Act 1985. This certificate is obtained by the secretary or a director completing a statutory declaration in the prescribed form (Form 117) that the company has an issued share capital of at least the statutory minimum.

Form 117 also requires details or estimates of the company's preliminary expenses and details of any benefits given to promoters;

• a PLC must have at least two members and at least two company directors. The secretary (or each joint Secretary) must also be a person who appears to the directors to have the requisite knowledge and ability to fulfil the functions and who:

  a) held the office of secretary or assistant or deputy secretary on 22 December 1980,

  or

  b) for at least 3 of the 5 years preceding their appointment, held the office of secretary of a non private company,

  or

  c) is a barrister, advocate or solicitor called or admitted in any part of the United Kingdom,

  or

  d) is a person who, by virtue of his previous experience or membership of another body appears to the directors to be capable of discharging the functions of secretary;

  or

  e) is a member of any of the following bodies:

  the Institute of Chartered Accountants in England and Wales. the Institute of Chartered Accountants of Scotland the Association of Chartered Certified Accountants the Institute of Chartered Accountants in Ireland the Institute of Chartered Secretaries and Administrators the Chartered Institute of Management Accountants (formally known as the Institute of Cost and Management Accountants), or the Chartered Institute of Public Finance and Accountancy

• a PLC normally has only 7 months after the end of its accounting reference period to deliver its accounts to the Registrar. A civil penalty will be incurred if accounts are delivered to Companies House after the statutory time allowed for filing. Late filing penalties are fully explained in our notes for guidance CHN 22.
• a PLC cannot take advantage of many of the provisions and exceptions applying to private companies under the Act such as audit exemptions for small private companies.
• a PLC cannot apply for voluntary strike off under the provisions of Section 652A Companies Act 1985. Further information about this is available in our notes for guidance "Striking Off, Dissolution and Restoration" CHN 27.

3. CAN A PLC ISSUE SHARES IN ANOTHER CURRENCY?

Yes. Provided that it has passed the necessary resolutions to adopt that currency as part of its authorised capital and given the directors the authority to allot that capital. However it must always have at least the authorised minimum of £50,000 sterling in issued capital, irrespective of what other currency it uses.

A company may use as many currencies as it wishes for its share capital provided that they are true

currencies. The ECU is not currently regarded as a true currency for this purpose.

4. WHAT THEN IS THE ADVANTAGE OF A PUBLIC COMPANY?

A PLC has access to capital markets and can offer its shares for sale to the public through a recognised Stock Exchange, and can issue advertisements offering any of its securities for sale to the public. In contrast a private company may not offer to the public any shares in that company.

5. CAN A PRIVATE COMPANY CONVERT TO A PLC?

Yes. Both a private company limited by shares and an unlimited company with a share capital may re-register as a PLC, but a company without a share capital cannot do so.

A private company must pass a special resolution that it be so re-registered and deliver a copy of the resolution together with an application form to the Registrar of Companies. The resolution must also:

• alter the company's memorandum so that it states that the company is to be a public limited company;

• make any other alterations to the memorandum so that it conforms to that required for a public limited company;

• make any required alterations to the articles of association of the company.

The application must be on the prescribed form, Form 43(3), be signed by a director or secretary of the company and must be accompanied by the following documents:

• a copy of the memorandum and articles of association of the company altered in accordance with the resolution above;

• a copy of a balance sheet prepared not more than seven months before the application date and containing an unqualified report by the company's auditors;

• a special report by the auditors regarding the net assets of the company at the balance sheet date in relation to the company's called-up share capital and its undistributable reserves;

• a valuation report regarding any shares issued wholly or partly for non-cash consideration after the balance sheet date;

• a statutory declaration on Form 43(3)e confirming that the resolution has been passed and that the company's net assets are not less than the sum of its called-up share capital and undistributable reserves.

An unlimited company, in addition to the above must:

• include a statement in the resolution that the liability of the members is limited and what the company's share capital is to be;

• make such alterations to the memorandum and articles of association as are necessary for them to conform to those of a company limited by shares.

6. CAN A PLC RE-REGISTER AS A PRIVATE COMPANY?

Yes. A public company limited by shares or by guarantee may re- register as a private company limited by shares or by guarantee by passing a special resolution to do so. However, if enough members object, under the provisions of Section 54 they may apply to the court to cancel the resolution within 28 days of its being passed.

The company must also satisfy the statutory minimum share capital requirements referred to in question 1 before the special resolution is passed.

The court may also order a public company to be re-registered as private on approving a minute of reduction of share capital which results in the issued share capital falling below the statutory minimum. In such a case the court will also specify alterations to the company's memorandum and articles. A special resolution to re-register is not required.

Similarly, a public company may be required to re-register as private on its issued share capital falling below the statutory minimum by other means such as redemption, forfeiture or repurchase of shares. In these cases a special resolution to re-register is required.

In all cases a resolution must also be passed to alter the memorandum and articles of association to those required for a private company.

The application for re-registration on form 53(b) must be accompanied by copies of the resolutions and copies of the memorandum and articles as modified to meet the new circumstances of the company.

7. WHAT IS THE COST OF RE-REGISTRATION?

The standard fee for re-registration is £20 or £100 for the premium same day service. If a change of name is required at the same time, a change of name fee of £10 is also payable (£200 in total for the premium service).

Deletion of the word "Company" or "and Company", or their abbreviations or their Welsh equivalents, on re-registration as a public limited company does not constitute a change of name under the Act. It does, however, constitute a change of name under other circumstances, e.g. a private company wishing to drop the word without re-registration or an unlimited company re-registering as limited.

8. DO THESE RULES APPLY TO AN OVERSEA PLC?

A company formed abroad, on establishing a branch or place of business in Great Britain, is governed by Part XXIII of the Companies Act 1985, just as any other oversea company is, so that most of the above rules do not apply. However, besides Part XXIII of the Act, they are also governed by regulation in their country of incorporation, by certain parts of the Financial Services Act 1986, and by the City Code on Takeovers and Mergers.

9. WHERE CAN I OBTAIN MORE INFORMATION?

You may write or telephone any of the Companies House addresses listed on the back cover of these notes.

Statutory forms and Notes for Guidance can be obtained from the addresses listed on the back cover of this leaflet or from law stationers.

Copies of the Companies Acts and Statutory Instruments may be purchased from any HMSO outlet or from good booksellers.