A public limited company (PLC) can be referred to us the company whose securities are traded on stock exchange and anyone has the liberty of buying and selling it. It is a legal corporation structure that is based in the United Kingdom and it possess similar features as the public trade company that is situated in the United States. The law has introduced mechanisms that strictly requires that the public companies to publish their true and complete financial positions so that the investors are able to determine the actual wealth of the shares that is also referred to us the publicly held companies (Korom and Metzinger, 2009,125). Similarly, public limited company is a legal designation of a limited liability company that has provides the general public with shares due to the limited liability it possesses. Furthermore, any individual is in a position of accessing the public limited stock that has been offered to the general public either during the initial public offerings, through trade on the stock markets or through private platform.
Generally, PLC requires two or more people to form it, which is a core necessity that any other company needs and it is established by filling the articles of association that entirely provides description of its membership, capital and purpose. Moreover, a limited company is required to give limited grants to its shareholders and also provide a lesser portion of the grant to the management. In order to raise the amount of capital for utilization the public company permits its business operators to sell their share to investors. The formation of PLC involves the following process that have to be put into consideration and includes promotion stage, incorporation stage and lastly the subscription stage. This stages are very vital since they lead to a formation of a desirable and affirmative PLC.
A PLC has the legal mandate to issue different kind of stock shares into the market and may include cumulative preference shares, redeemable shares, bearer shares, preference shares and ordinary shares (O’Regan, 2010,297). The company shares are traded freely on the basis of exchanges and the PLC is required by law to have a minimum share of capital and a designation after the companies’ name.
The PLC is beneficial in terms of capital since it is able to sell shares to the public implying that anyone is capable of investing in the company and thus a significant alternative on where to source value funds. Additionally, it emphasizes on the aspect of risk spreading thus as a larger proportion of people buy shares in the PLC, thus more risk is being spread out (Cuervo-Cazurra and Genc, 2008,957). Finally, low risk rate in the PLC provides a perfect opportunity for growth and expansion of businesses hence investing in new products and projects through money that is obtained from the shares.
Nevertheless, the PLC faces a number of challenges that include high regulation measures that have been put in place by the government, thus if you need your company shares to be listed one must be able to meet strict discourse and filling requirement in the London Stock Exchange (Bergiel, Bergiel and Balsmeier, 2008, 99). Seemingly, in order for your company to take part in the trade they must be able to attain the minimal share capital of 50,000 Euros which at least 25% of the cash has to be paid and therefore implying a high financial commitment.
Bergiel, B.J., Bergiel, E.B. and Balsmeier, P.W., 2008. Nature of virtual teams: a summary of their advantages and disadvantages. Management Research News, 31(2), pp.99-110.
Cuervo-Cazurra, A. and Genc, M., 2008. Transforming disadvantages into advantages: Developing-country MNEs in the least developed countries. journal of international Business Studies, 39(6), pp.957-979.
Korom, V. and Metzinger, P., 2009. Freedom of establishment for companies: the European Court of Justice confirms and refines its Daily Mail Decision in the Cartesio Case C-210/06. European Company and Financial Law Review, 6(1), pp.125-161.
O’Regan, P., 2010. Regulation, the public interest and the establishment of an accounting supervisory body. Journal of Management & Governance, 14(4), pp.297-312.