UK Public Company Formation (PLC)
What is a PLC ?
The United Kingdom became one of those states that regulated the rules for all its companies. And even the incorporation model was established in the 1860s, but the procedure is still the same, it is governed by the Companies Act. In the UK, offshore companies are not the sort of entities that will evade tax, they simply offer the possibility of lower taxation. Thus there is less tax, but the image of the company remains unchanged, which is most important because no one would want to lose their reputation.
Private Limited Company is a form of shareholders’ company. Under this company, the owners and directors are not personally financially liable in case of trouble. This means that if the company goes bankrupt and owes money, the members of the company will not have to cover the debt with their assets.
Such companies can only do general business with offshore organisations. The minimum composition of the company team is three people – a director, a shareholder and a secretary, but the composition can also be expanded. The company is also formed by the signatories of an agreement, who must be non-resident partners.
Authorised capital of the company is £50,000. The company will be registered at the national level only if it issues all its shares, i.e. 100% of the share capital, also securities are paid up to the amount of 25%. All shareholders’ meetings can be held anywhere in the world; a basic requirement for such meetings is that all interested parties must be notified in advance.
Company management in terms of taxation and accounting
Limited liability companies which are under the jurisdiction of the UK but are not actively trading may not file accounts with the tax authorities, this can simplify management of the company which takes place remotely.
There is also an obligation to file accounts on incorporation. These have to be filed after the end of the accounting period, not exceeding 9 months, i.e. no later than that time period. In order to keep the company on the register you have to submit an Annual Return once a year, the deadline for that is 1 month.
The company is liable to corporation tax on its profits. Value Added Tax (VAT) will be applied to the company if the income is over £40,000. There are no options to avoid such liability.
Why incorporate, what are the benefits?
As the UK is renowned, even very popular, for often acting as an offshore zone, its fame is based on such advantages:
- Tax rates are fairly low.
- The country remains stable with respect to the economy and politics
- Easy company registration or liquidation procedure, which also happens rather quickly
- The possibility of appointing a director who may not be a resident
- The company receives a prestigious title within the territory of the European Union.
What documents must be prepared for registration?
In order to incorporate a PLC you must have the following documents
- Certificate of Incorporation
- Memorandum and Articles of Association
- Document of appointment of the first director
- Protocol of the first meeting
- Share certificates
- General power of attorney
- Types of company shares
It has already been said that a company issues 100% shares, but now we have to find out what they are and what they are. A share is an important and valuable document which is issued by a company, on acquisition of which the person who bought it becomes a co-owner. Therefore, even the smallest share can be a co-owner. Shares can be of different types and each will have its own characteristics.
Types of shares:
- Ordinary shares – ordinary shares in a company with no special rights or restrictions, usually divided into classes of different value. They have the advantage of being entitled to an annual dividend, which is paid out on the shares in the near future.
- Cumulative – those shares which allow, if dividends are not paid during the year, they carry over to the following year.
- Redeemable – those shares that can be redeemed at the discretion of the company after a certain period, but the company cannot be the sole owner of such shares.
A public company has access to the capital market, so it can offer its shares for sale to others through stock exchanges and may issue advertisements in which it can offer securities for sale, whereas a private company has no such privilege as offering any shares.
What are the advantages of opening this type of company?
There are many advantages:
- You can raise capital much faster than you would for a limited company
- You will be able to list your shares on the London Stock Exchange which in itself represents a bigger and more likely investment and this is incredibly beneficial for the company
- The risk of ownership can be allocated to a very large number of shareholders and this will be achieved by means of public share offers
- Early investors can sell some of their shares so that the following shareholders can make a profit, but the early investors will still have a bigger share in the company
- It is more advantageous for the company to receive funds in a campaign account so that the company will not have to rely on a mere handful of investors as many corporations do today. This has the advantage that a small number of investors are able to influence the company quite a bit with a large number of shares, compared to the fact that with a large number of shareholders they are not able to make any decisions that could be challenged, thus not being able to access any changes. Simply put, the more shareholders, the more people with shares, the fewer people who can decide everything without looking at the decisions of others.
- The company may have many more additional sources of funding compared to private companies. Financial institutions materially help to finance companies that are not privately owned and are publicly listed.
- The greater likelihood of a company being financed by other sources on very favourable terms, enables it to grow in terms of high reputation, publicity and the like, with a good chance of breaking into other markets with new products and acquisitions.
In fact, you can see for yourself now what great prospects you will have in business by setting up just this type of company. Such a business will be very respectable, especially in the UK, because in front of you is the birth of new business opportunities and prosperity, with no pressure from the authorities in terms of laws and everything else, because this is the state incredibly strongly supports all businesses, while only improving everything that can be, the same and the maximum speed of registration, and lack of requirement for a large list of documents, which is not the case in all states. And you can say with confidence that all your efforts will not be in vain, because you will not be allowed to make it all for nothing.