Public Limited Company Law

A public limited company, or PLC, is a type of company that is legally allowed to offer its shares to the public and list on a stock exchange. In the UK, PLCs are regulated by a specific set of legal requirements that ensure transparency, accountability and investor protection. These rules form part of public limited company law, a vital area of corporate regulation that affects how large businesses operate.

Public limited company law sets out the rules for forming, running and dissolving PLCs, as well as the responsibilities of their directors, the rights of shareholders and the obligations they have to the wider market. Understanding this area of law is essential for anyone involved in managing or investing in publicly traded companies.

What is a public limited company?

A public limited company is a business structure that allows its shares to be bought and sold by the public. While private companies are limited to private ownership, PLCs can raise capital by selling shares to institutional or retail investors. This access to public funds makes PLCs an important part of the financial and economic landscape.

To become a PLC in the UK, a company must meet specific legal conditions. These include having a minimum share capital of £50,000, of which at least 25 percent must be paid up. The company must have at least two directors, a company secretary who is formally qualified, and comply with enhanced disclosure and governance requirements.

Key aspects of public limited company law

Public limited companies are governed by the Companies Act 2006, which sets out the legal framework for all companies in the UK. However, PLCs are subject to additional regulations due to their ability to raise funds from the public.

Some of the main legal requirements include:

• Transparency and reporting: PLCs must prepare detailed annual accounts, appoint auditors and file financial statements with Companies House. If listed on a stock exchange, they must also comply with the Financial Conduct Authority’s (FCA) disclosure rules.

• Corporate governance: PLCs are expected to follow principles set out in the UK Corporate Governance Code. This includes having independent non-executive directors, audit committees and procedures for shareholder engagement.

• Shareholder rights: Public shareholders have rights to vote on key issues such as director appointments, dividends and major transactions. PLCs must issue notices of general meetings and allow shareholders to participate in decision-making.

• Prospectus and listing rules: Companies wishing to list their shares must produce a prospectus and meet strict listing requirements. These rules ensure investors have accurate and sufficient information before purchasing shares.

• Market abuse and insider trading laws: Directors and senior staff must comply with laws designed to prevent insider trading and other abuses of market-sensitive information. The Market Abuse Regulation (MAR) sets out how companies must handle confidential data.

Directors’ duties in a PLC

The directors of a public limited company carry significant legal responsibilities. They must act in the best interests of the company and its shareholders, exercise care and diligence, and comply with their statutory duties under the Companies Act.

Because PLCs are accountable to the wider public and financial markets, directors must also ensure that the company’s disclosures are honest and complete. Any failure to meet these standards can lead to disqualification, fines or even criminal liability.

The role of the company secretary is also more important in a PLC than in a private company. The secretary must be properly qualified and is responsible for ensuring compliance with legal and regulatory requirements.

Why public limited company law matters

The legal framework around PLCs is designed to promote trust and integrity in the financial markets. By requiring high levels of transparency and accountability, public limited company law helps protect shareholders, prevent fraud and maintain investor confidence.

For companies, operating as a PLC brings access to large amounts of capital and the opportunity to grow rapidly. But it also means increased scrutiny from regulators, shareholders and the public. Businesses must be prepared to meet higher standards of governance and communication.

Investors rely on the legal obligations imposed on PLCs to make informed decisions. The law ensures they have access to key information and that their rights as shareholders are respected.

Final thoughts

Public limited company law provides the foundation for how large, publicly owned businesses are formed and governed in the UK. It ensures that companies operate in a transparent and responsible manner, protecting the interests of both investors and the wider economy.

For directors, shareholders and advisers, understanding these legal requirements is essential. The rules are complex but are in place to maintain trust in the market and allow companies to grow while remaining accountable.

Whether you are thinking of taking your company public or investing in a PLC, being aware of the legal structure and responsibilities involved will help you make informed and confident decisions.