Public limited company (plc)

• In a public limited company (PLC), shares are sold to the public on the stock market
• People who own shares are called ‘shareholders’ and become part owners of the business
• A PLC is managed by a chief executive officer (CEO) and a board of directors
• When a business sells shares on a stock market, it is known as ‘floating on the stock exchange’
• Advantages of being a PLC:

  • Ability to raise additional finance through share capital
  • Shareholders have limited liability
  • Increased negotiation opportunities with suppliers due to economies of scale
• Disadvantages of being a PLC:

  • Expensive to set up, requiring a minimum set up cost of £50,000
  • More complex accounting and reporting requirements
  • Greater risk of a hostile takeover by a rival company
  • Shareholders expect to receive a percentage of the profits as dividends
  • Shareholders may clash when making decisions about the business