What Public Limited Company (PLC) Means in the U.K.

What Is a Public Limited Company (PLC)?

A public limited company (PLC) is a public company in the United Kingdom. PLC is the equivalent of a U.S. publicly traded company that carries the Inc. or corporation designation.

The use of the phrase “public limited company” or the PLC abbreviation after the name of a company is mandatory and communicates to investors and to anyone dealing with the company that it is a publicly traded corporation.

How a Public Limited Company (PLC) Works

A PLC designates a company that has offered shares of stock to the general public. The buyers of those shares have limited liability, meaning that they cannot be held responsible for any business losses in excess of the amount they paid for the shares.

In the U.K., a PLC operates along similar lines as a public corporation in the U.S. Its operations are regulated and they are required to publish periodic reports to shareholders and prospective shareholders on its true financial health.

Requirements for a PLC

U.K. company law says that a PLC must have the PLC or “public limited company” designation after the company name and minimum share capital of £50,000. Like a publicly traded company in the U.S., PLCs offer various types of shares, such as ordinary and cumulative preference shares. Ordinary shares of a PLC are similar to common stock issued by U.S. corporations.

Cumulative preference shares are akin to preferred stock in the U.S. Other key requirements for a PLC include offering shares, appointing directors, and adhering to registration requirements.

Advantages and Disadvantages of a PLC

The biggest advantage of forming a public limited company (PLC) is that it grants the ability to raise capital by issuing public shares. A listing on a public stock exchange attracts interest from hedge funds, mutual funds, and professional traders as well as individual investors. That tends to lead to increased access to capital for investment in the company than a private limited company can amass.

On the other hand, there's much more regulation for a PLC in the U.K. than there is for a public corporation in the U.S. They are required to hold annual general meetings open to all shareholders and are held to higher standards of transparency in accounting. Because they’re public, they’re also vulnerable to pressure from shareholders and takeover bids from rivals.

By becoming a PLC, the company is given greater access to capital, and shareholders are offered liquidity. These are similar benefits of a company in the U.S. going public. On the downside, becoming a PLC means more scrutiny and required reporting. The company will have more shareholders and the value of the company could become more volatile as it is determined by the financial markets. 

Public Limited Company (PLC) vs. Private Limited Company (LTD)

A PLC is a public company in the U.K. Meanwhile, there are private limited companies (LTDs), which are private companies in the U.K. Shares of a private limited company are not offered to the general public. 

Private companies are still incorporated, generally with the Companies House. These companies are still required to have legal documents to form the business. Private companies must have at least one director. 

To raise capital via a public investment in the U.K. the company must be a PLC. PLCs are like LTDs, except they are publicly traded, with shares that can be freely sold and traded on a stock exchange. Meanwhile, PLCs must have at least two directors and hold annual shareholder meetings.

How To Invest in a PLC

As public companies, any retail investor in the United Kingdom can buy shares in a PLC. The simplest way to do so is through a brokerage: The investor can simply create an account, transfer money, and buy shares of the company. It is also to buy shares through a retirement account, so some people may own PLC shares without even knowing about it.

This may be more complicated for investors outside the United Kingdom. Many U.S. brokerages allow their clients to directly buy shares in foreign markets, exchanging dollars into local currency to make the purchase. In addition, many U.K. companies are tradable in American markets in the form of American depositary receipts. The downside is that the investor would assume an additional level of currency risk.

Examples of PLCs

All of the companies listed on the London Stock Exchange are, by definition, PLCs. The fashion retailer Burberry is Burberry Group plc. Rolls-Royce is Rolls-Royce Holdings plc. The 100 largest PLCs on the London Stock Exchange are grouped together in an index called the Financial Times Stock Exchange 100 (FTSE 100) or, colloquially, the Footsie.

The companies in this group are representative of the United Kingdom's economy as a whole. The Footsie is comparable to the Dow Jones Industrial Average (DJIA) in the U.S. The biggest PLCs by market capitalization in the Footsie, as of February 2024, included Shell, HSBC, and AstraZeneca.

The formal names of all of these companies include the PLC designation. Not all PLCs are listed on a stock exchange. A company may choose not to list on an exchange or may not meet the requirements for listing.

The Bottom Line

A PLC is the equivalent of an Inc. or Corp. company that trades in the U.S. stock market. PLCs are publicly traded companies in the U.K. Many famous U.K.-based companies are publicly traded and have the PLC designation after their name, such as consumer goods company Unilever plc and drugmaker AstraZeneca plc.