Public Limited Company - PLC

What is a 'Public Limited Company - PLC'

A public limited company (PLC) is the legal designation of a limited liability company which has offered shares to the general public and has limited liability. A PLC's stock is offered to the general public and can be acquired by anyone, either privately, during an initial public offering or through trades on the stock market.

!--break--The appellation PLC is more commonly used in the United Kingdom and some Commonwealth countries, as opposed to "Inc" or "Ltd," which are the norm in the United States and elsewhere. The mandatory use of the PLC acronym after the name of the company serves to instantly inform investors, or anyone dealing with the company, that the company is public and probably fairly large.

Forming a PLC

Originally, a PLC is formed like any other company. Two or more people are required to form it, and it is constituted by the filing of articles of association that describe its purpose, membership and capital. A limited company grants limited liability to its shareholders and, to a lesser extent, its management.

Being a public company allows a business to sell shares to investors in order to raise capital. Only PLCs may be listed on the London Stock Exchange and have the suffix PLC on their ticker symbol. Several other requirements must be met to obtain and maintain the listing: the PLC must be registered as a public company, it must have at least £50.000 authorized share capital, and it must meet ongoing disclosure and filing requirements of the stock exchange.

Examples of PLCs

All companies listed on the London Stock Exchange are, by definition, PLCs. For example, the oil company British Petroleum is properly called BP PLC, clothing and accessory retailer Burberry is Burberry Group PLC, and automaker 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 FTSE is comparable to the Dow Jones index in the United States.

Not all PLCs are listed on a stock exchange, therefore even if a company uses the PLC suffix in its name, it does not necessarily mean it is listed. Rather, it means that it meets the other requirements but has chosen not to be traded on a stock exchange or does not otherwise meet the requirements for being listed on an exchange.

BREAKING DOWN 'Public Limited Company - PLC'