PLC Basic Information
- A company of your own
- The unique quality of a PLC
- The advantages and disadvantages of a PLC
- Forming a PLC in practice
- How you form your PLC
- Requirements after registration
- Regular and annual requirements
- Forming or purchasing a PLC
- The National Business Register range of services
- Useful addresses
To start a company which you own, manage and develop yourself is a wide-spread ambition. There are many attractions if you register a company - independence, challenge and excitement; meeting new people and new situations; financial rewards if the business 'takes off'.
Equally, though, an 'own' business means hard work, determination, new obligations and responsibilities. Each new situation needs research, judgement, decision-making - then standing by the consequences and reaping the rewards when you look to start a company.
Whether to register a company as a Limited or PLC Company, and how to go about it are questions which can be time-consuming and confusing.
This National Business Register guide will help you understand what a PLC is all about: The Benefits, Obligations and How to Set It Up. The guide is user-friendly yet comprehensive and covers everything you should know about how to start a company as a PLC - including the pitfalls, which we will service will ensure you avoid.
There is one highly significant difference between a limited company and a Public Limited Company (PLC) and that is status. Having 'PLC' or 'plc' at the end when you register a company adds prestige, respect and credibility. Customers, staff and suppliers are more aware of plc status rather than just a simple limited name.
Most people think PLC companies are listed on the Stock Exchange or Alternative Investment Market (AIM), but virtually all PLC companies we sell are used by the first Shareholders/Directors unlisted and they retain control over their company at all times.
Even by not being listed you can sell as many shares to the public or employees as you wish and thereby raise working capital for company use.
Obviously if you sell more shares than your own shareholding you can find yourself outvoted or not in control so read the share sections carefully.
No-one can ever buy shares in your company without your consent so you can keep your plc as private as you wish, a husband and wife business can still have the prestige and cachet of a PLC. How nice would your business cards look with your name and Managing Director of 'Bloggs Corporation PLC'?
If a normal Limited company fails, the limit of liability an owner must pay is governed by how many shares he has, ie. a Director with 100 x £1 shares would only owe £100 to creditors.
With a PLC company at least £50,000 x £1 shares must be issued so the potential liability is £50,000 to be paid to creditors. However, if you have invested money or assets into the PLC, then your liability has been paid up and creditors cannot come to you for more.
If, however you have 100,000 x £1 shares available and only pay up £50,000 then your liability will be the difference, ie. £50,000.
Obviously, if you use your PLC company properly these scenarios should not arise. Some people trade through a limited company and have a PLC for status, which does not do risky trading.
A PLC can be formed when you start a company and remain dormant, so it does not even trade at all.
Prestige and Status
There is something about owning a PLC which owning a limited company just doesn't quite have.
A PLC is seen as having greater prestige and status. This may be partly an image, but it does affect the behaviour of clients, customers, suppliers - and employees.
Ownership and Continuity
The ownership of a company is known precisely, so it is easier to value, buy and sell. The owners are listed along with the proportion of the Company (or Shareholding) that they own.
PLC shares can be sold or, for example, given away in a will.
Setting up Costs
Starting a company as a PLC is not expensive, usually a small sum compared with the total investment required to establish a new business, and the prestige you get will outweigh the cost.
PLCs must have their trading results Audited by a Registered Auditor for example, a Chartered or Certified Accountant. They must File their Annual Accounts with Companies House so that the public has access to them. This is how suppliers check up on a Company before opening a line of credit. PLC status gives suppliers and customers greater confidence.
Assets and Income
Company assets belong to the Company and must be used for Company business. 'Drawings' are taken as a 'Salary' - plus Dividends, after tax.
Taxation and National Insurance
PLC Company Directors are normally employees of the Company paying Tax through PAYE. Directors benefit in other ways and can receive dividends on which the company pays tax and there is no National Insurance payable on Dividends.
There are many technical matters with regards to tax and National Insurance you need to consider when you start a company, so talk to your accountant before deciding what is the most advantageous way for you to take drawings.
The creating and running of a PLC is governed by various Companies Acts and for formation every PLC must have:
1. A Unique Name
The PLC name must not be identical to any other company.
2. The Right People Owners:'Members' or 'Shareholders'
To start a company, it has to be owned. It must have at least two owners. Owners are technically Members. All Members have some Share in the business as Shareholders and they must be listed in a Register of Shareholders.Managers: 'Officers' or 'Directors'
Owners must appoint Officers to manage the business, which includes operating it according to the requirements of the Companies Acts. These are the Directors. In most PLCs, Directors are also the Shareholders. To register a company, it must have at least two Directors and a Company Secretary. If there are two or more Directors, one of them can also be Company Secretary.A 'Company Secretary'
A Company Secretary must be appointed by Shareholders as the Officer of the Company specifically responsible for maintaining all statutory information about the PLC.
3. A Specific Location - The Registered Office
This is the legal address of the business when you register a company (not necessarily its trading address) at which Companies House, HM Revenue & Customs, customers, suppliers and the public can serve documents and assume that they have been received by the PLC Directors. Details of Shareholders and Officers must also be available for public scrutiny at this address.
4. Clear Objectives - Memorandum and Articles of Association
The nature of the business the PLC will carry out, along with other details, must be clearly defined in a document called the Memorandum and Articles of Association.
When you have decided to register a company as a PLC and you know who the Owners, Directors and Company Secretary will be, formation is relatively straightforward. Now, though, there are many details to sort out. Most people find that specialist advice is necessary to ensure that Registration is achieved quickly and efficiently.
The following information is needed to Register a company as a new PLC:
The PLC Name and the People
- Names of the First Members (Shareholders)
- Names of the First Officers (Directors)
- Name of the Company Secretary
- The Registered Office Address
- Memorandum and Articles of Association
- Shareholding Details
- Declaration of Compliance
These details can be conveniently completed using the National Business Register application form.
The Unique Name
The PLC Name can be almost any name you want, although there are some specific limitations laid down in Company Law.
A PLC name must not:
i) Be the same as another company on the Register. Check this by carrying out a Name Search through
National Business Register.
ii) Contain the words Limited, Unlimited, or Public Limited Company except at the end of a Name.
iii) Be offensive.
iv) Constitute a criminal offence.
v) Give the impression that the business is connected with the Government or a Local Authority.
What to watch out for
There are certain 'Words and Expressions' for which special permission must be obtained from the Secretary of State or from other Institutions. Words like Royal, British and so on. The idea is to stop Companies implying that they are bigger than they actually are or supply services that they don't - check with National Business Register on your choice of name.
Beware of starting a company with a name which is similar to or too like another company name. An existing Company has twelve months in which to complain to the Secretary of State that a new name is 'too like' theirs. Many new Companies have had to change their Name at this point - a potentially expensive experience. Names can be considered 'too like' if they are phonetically identical, use similar spelling, have a similar Distinctive element, or are similar in other ways. Companies House will not check for 'Similar' names, only 'Identical' names. So choose extremely carefully, and use National Business Register's specialist search facilities.
Beware of Passing-Off. This happens when one business - whether a Company or not - copies another, even in ignorance, and causes customer confusion or damage to the existing business. Companies House does not check non-Company business names, Trade Marks or Consumer Credit Act licences, and owners of any of these can sue if you copy. We can therefore carry out comprehensive searches on your behalf before we form your PLC.
If your business is likely to require a licence under the Consumer Credit Act, its name must be different to all other licences registered with the Office of Fair Trading. National Business Register can check this register as well before finalising your name.
Once you know the name you want, check with National Business Register that it is available and possible - for example, that it doesn't exist already and that you won't have any other problems with it!
The People - Members, Directors and Company Secretary
The Members, Directors and Company Secretary will have been decided upon amongst yourselves and can be added to forms where necessary.
What to watch out for
Anyone over the age of 16 can be a Director, unless they are an undischarged bankrupt or subject to a disqualification order. So check out your potential Directors if you are not familiar with their background.
The Company Secretary's duties include completion of various annual reports - see page 5. An agent, accountant or solicitor can take on this role for an annual fee. Failure to provide certain information on time, however, is an offence - for example, late filing of Annual Accounts will definitely result in a fixed fine.
A Specific Location - The Registered Office
To start a company as a PLC it must be registered in the Region in which you have decided to locate the Registered Office (England & Wales, Scotland or Northern Ireland).
The Registered Office need not be your trading address and PLCs often use the address of an accountant, solicitor or National Business Register for an annual fee as their Registered Office address.
What to watch out for
Make sure that you check the annual fee for a 'hired' address and especially that the requirements for public access to information are met.
Memorandum and Articles of Association
The Memorandum and Articles set out the Objects and rules for the Company.
a) Clear objectives
What to watch out for
To reduce cost and speed up formation, National Business Register often uses a standard general Objects clause which permits a PLC to do almost anything. This is legally valid, but broad Objects are sometimes not acceptable to Banks. Some Banks may prefer Objects which are more specific to a particular trade, profession or other commercial activity. National Business Register has a wide range of Objects specifically prepared to meet such requirements.
1) Capital and Shares
You must decide on the amounts of both Capital and Shareholding.
The authorised capital represents the size of the company and how many shares could in total be issued. The Minimum Authorised Capital for a PLC is 50,000 £1 shares, ie. £50,000.
You must issue a minimum of 50,000 shares of which 1/4 of the value must be paid up. You are liable for
balance of the 3/4 not paid up should the company go into liquidation.
John Smith 25,000 shares 1/4 paid £6,250
Bill Jones 25,000 shares 1/4 paid £6,250
They would both still owe £18,750 each.
Remember assets can be put into the company in exchange for shares, ie. motor vehicles, equipment etc. and then your shares would be fully paid up.
What to watch out for
Although control is achieved with 51% of ownership, minority holders still have some legal rights. Check with your solicitor, accountant or National Business Register before finalising arrangements with co-owners.
The Statutory Declaration A Statement of Compliance, which confirms that all the information supplied for forming your PLC is correct, is automatically completed by National Business Register on your behalf and submitted to a solicitor for approval.
Once this information is supplied on our forms, and assuming that the proposed name appears to be acceptable, we will register a company PLC, obtaining a Registration Number, adding it to the Company Register and provide you with a Certificate of Incorporation. This, or a copy, must be displayed at the Registered Office, and a copy will be required by your Bank.
You are now a Shareholder or Director (or both) of your own PLC, and you can begin to trade under this name.
Once your Company is registered, you must immediately meet a number of further requirements.
You must display a nameplate at the Registered Office address.
The PLC must obtain Statutory Books in which to keep the Register of Shareholders, and later the Minutes of Annual and Extraordinary General Meetings etc.
HM Revenue & Customs will contact you to register for PAYE purposes. Remember that Directors are employees, so you must register even if you do not employ anyone else initially.
You must register your PLC for VAT, unless the turnover will be below the minimum rate. This can be done by National Business Register or your accountant.
Now you can print your business stationery. The PLC Name, Registered Number and Registered Office Address must be shown on all stationery, plus your VAT Registration Number on Invoices and Statements, etc. Make sure all these details are correct as Directors can loose their limited liability rights if they are incorrect.
The Company Secretary or your accountant can inform Companies House of the Accounting Date, that is, the end of the Company's first Financial Year.
The Company Secretary must issue Share Certificates and detail these in the Shareholders Register.
Now that your PLC is fully established, there are a number of statutory requirements which must be met on an on-going or annual basis. The Company Secretary is responsible for seeing that these are done.
1. Change of PLC Details
Companies House must be notified of any changes to PLC ownership, Officers or Registered Office address.
The register of Shareholders and Register of Directors must be kept up to date at the Registered Office, and Share Certificates issued as appropriate.
3. Company Meetings
Minutes of Annual (and Extraordinary) General Meetings must be kept in the Statutory Books.
4. Accounts - Book-keeping
Books must be kept up-to-date which reflect the current financial position of the PLC. Check your systems with your accountant early on.
5. Annual Accounts
Annual Audit and Accounts must be prepared for Companies House and HM Revenue & Customs. These must be signed by a Director and the Company's Auditor. Companies House must have a copy of PLC accounts within 6 months of the end of the Financial Year or late filing penalties apply.
6. Annual Return
Distinct from Annual Accounts, the Annual Return confirms current Registration details of the PLC. Companies House now allows you to file this information online for speed.
Most PLCs are formed or purchased through a Company formation agent, such as National Business Register, an accountant or a solicitor, who will cover all the necessary specialist details.
The advantage of professionals is that they can advise on Company names, they have proper systems to carry out Company searches, ensure forms are completed correctly, provide Objects, Memorandum and Articles, Nameplates, Statutory Declarations and so on. However, the range of services varies considerably. Be cautious about saving a few pounds on the basic cost - you may have to change things later, and that can prove expensive.
Tailor-made PLCs are produced entirely to the client's requirements, normally taking just 24 hours to Register. The advantage is having the Name you want from the start (if available) and Objects which are specific to your Company.
Tailor-made Companies are not formed with nominee Members and Directors' names. A Tailor-made PLC can be registered through an even quicker express service, but additional costs are obviously incurred.
National Business Register provides your full 'Company Kit' in an attaché case and these contain all the items needed before and after you register a company. We provide and complete the following:
- PLC Certificate of Incorporation
- PLC Certificate to Trade and Borrow
- 6 sets of Memorandum and Articles of Association
- Statutory Books and Completed Register
- Share Forms
- Accounting Date Notification
- Share Certificates
- Advice regarding the first meeting of Directors
This is all boxed in an attractive attaché case.
NATIONAL BUSINESS REGISTER COMPANY KIT
The National Business Register Company kit is unique and contains all the fully completed items you need for your PLC, neatly packed in an attaché case.
In addition, we can supply any other requirements for your PLC.
National Business Register Company Attache Case - Certificate of Incorporation, 6 sets of Memorandum and Articles of Association, Completed Combined Register, Share Issue, Minutes of First Meeting, Share Certificates and Certificate to Trade and Borrow.
As the leading Company formation agent, National Business Register offers the most comprehensive range of services available.
PLC formation includes a free Company Name Search, completion of all Registration requirements and provision of a Company Kit - an attractively packed set in an attaché case with all you need to start trading with your new PLC.
Registered Office Address Facilities
National Business Register can provide a Registered Office facility in Birmingham.
Company Secretary Service
The role of a Company Secretary is a vital one, but the responsibilities can seem daunting. National Business Register can supply an efficient, professional Company Secretary service and advise Companies House of any change of PLC particulars.
We can also organise VAT Registration for you.
Our service to new PLCs extends to the final details such as provision of your Nameplate. You may select from a wide range of plates.
Business Name and Trade Mark Search and Registration
A simple name check will not guarantee your absolute 'ownership' of a name to start a company, nor protect you from possible 'passing off' claims against your chosen name. National Business Register offers a thorough and comprehensive check of all Business Names, Company Names and Registered Trade Marks. Detailed information on choosing Business Names is also available.
National Business Register can also arrange to register your trading name, or any product name, as a Trade Mark on your behalf, as well as Internet Domain Names.
Consumer Credit Act Search and Registration
If your PLC is in any way connected with transactions where customers are given time to pay (for example, if it sells on credit, hires or leases out goods, lends money, issues trading checks or credit cards, arranges credit for third parties, offers HP terms, collects debts, helps others with debt problems or advises on the credit standing of individuals) you may need a Consumer Credit Act licence from the Office of Fair Trading.
Every trading name licensed by the OFT must be different, and over 400,000 OFT licences have been issued. If your PLC is likely to need a CCA Licence, these names should be checked before registering the PLC name. National Business Register can check this register for you, and apply for an OFT licence, if required, on your behalf.
INTERNATIONAL AND OFFSHORE COMPANIES
National Business Register also forms Offshore and International Companies for worldwide tax efficiency and trading. Ask for our International brochure.
An Offshore Company Network can be cost-effective at surprisingly low levels of turnover.
National Business Register
Blythe Valley Business Park
0121 678 9000
Institute of Chartered Accountants
P.O. Box 433,
London, EC2P 2BJ
020 7920 8100
29 Lincoln's Inn Fields,
London, WC2A 3EE
020 7242 6855
The Law Society
113 Chancery Lane,
London, WC2A 1PL
020 7242 1222