Public Limited Company (PLC) — Public Limited Liability Company in Ireland

Key Characteristics:

1. Shares Traded on the Stock Market: Public Limited Companies (PLCs) are companies whose shares can be freely bought and sold on stock markets. This allows the company to raise capital through public share offerings (IPOs) and attract both large and small investors. The company’s shares become available to the general public, and any investor can become a shareholder.

2. Minimum Capital: Under Irish law, a PLC must have a minimum share capital of €25,000. This makes the PLC form suitable only for large companies that can attract or have access to this level of capital at the outset.

3. Minimum Shareholder Requirements: A PLC requires at least one shareholder for incorporation, although these companies typically have many shareholders, as they raise capital by selling shares.

4. Minimum Director Requirements: A PLC in Ireland is required to have at least two directors. Additionally, the company must appoint a qualified company secretary. The directors are responsible for managing the company, including preparing financial statements and ensuring compliance with regulatory requirements.

5. Transparency and Reporting: A key requirement for PLCs is a high level of transparency. Public companies must publish their financial reports, and their activities are regulated by strict rules that require disclosure of information to investors. PLCs must submit annual reports to the Companies Registration Office (CRO) and provide financial statements to shareholders.

6. IPO and Secondary Share Offerings: A PLC can raise capital through an Initial Public Offering (IPO), allowing the company to go public. After the IPO, the company can continue to issue shares to raise additional capital through secondary offerings. This makes the PLC an ideal form for large companies looking to significantly expand their operations.

Core Requirements:

• Minimum Capital: As mentioned, a PLC must have a minimum share capital of €25,000, and before listing on a stock exchange, the company must ensure that at least 25% of this capital is paid up.

• Stock Exchange Listing: After completing an IPO, the company can be listed on a stock exchange, such as Euronext Dublin (formerly the Irish Stock Exchange), which provides access to large international investors.

• Corporate Governance: PLCs must adhere to strict corporate governance rules, including the establishment of audit, nomination, and remuneration committees to protect shareholders’ interests.

Financial Reporting and Taxation:

1. Reporting: PLCs are required to submit annual financial reports, undergo audits, and disclose significant information about their activities and financial condition. This level of reporting provides investors with detailed information, which is essential for raising capital in public markets.

2. Taxation: Like other companies in Ireland, PLCs are subject to corporation tax at a rate of 12.5% on trading profits. Companies engaged in non-trading activities are taxed at a rate of 25%. Public companies must also pay VAT if their turnover exceeds set thresholds.

When to Choose a PLC:

1. Large Enterprises: PLCs are typically chosen by companies that have already reached a significant scale or plan to expand aggressively. Raising capital through an IPO and the ability to issue new shares make PLCs ideal for these goals.

2. Companies Seeking International Recognition: With a stock exchange listing, the company gains access to large international investors and markets. PLCs offer opportunities to raise capital globally and improve their liquidity.

3. Long-Term Development: PLCs can use the funds raised to expand operations, invest in new projects, or acquire other companies, making them a long-term strategy for business growth.

Advantages of a PLC:

1. Capital Raising: The primary advantage of a PLC is the ability to raise significant capital through public markets. Shares can be sold to both institutional and retail investors.

2. International Recognition: Being listed on a stock exchange increases the company’s prestige and attracts global investors, which can support further growth.

3. Liquidity of Shares: Publicly traded shares provide liquidity to investors, as they can buy and sell shares on the stock exchange at any time, making the company more attractive to investors.

Disadvantages of a PLC:

1. High Costs of Establishment and Management: The regulatory requirements for PLCs involve significant costs, including legal services, accounting audits, and the publication of reports.

2. Transparency: PLCs are required to disclose detailed information about their financial activities and management, which can limit flexibility in strategic decision-making and expose the company to market fluctuations.

3. Dilution of Control: By attracting a large number of shareholders through an IPO, the original owners may lose a significant portion of control over the company.

Example:

• Large International Company: Irish companies such as CRH plc (building materials) and Ryanair(airline) are examples of successful PLCs that have raised significant capital in international markets, enabling them to expand their operations and establish themselves on the global stage.

Public Limited Companies (PLCs) are a suitable form for large enterprises looking to raise substantial financial resources and expand their operations through public markets. The high transparency and reporting requirements help ensure investor confidence but also place significant responsibilities on the company’s management.