Skip to content
× FreshBooks App Logo
FreshBooks
Official App
Free - Google Play
Get it
You're currently on our UK site. Select your regional site here:
4 Min. Read

Difference Between LTD Vs PLC Company

Difference Between LTD Vs PLC Company

Some types of companies are going to have a different business structure compared to others. This is because you might operate a little differently or sell certain products or services. For example, sole traders will have a different business model than private companies or limited companies.

But when it comes to private limited companies (LTD) and public limited companies (PLC), are there major differences? How do you know which business structure will suit your needs best? Here is everything you need to know about LTD and PLC companies and some of their main differences.

Here’s What We’ll Cover:

What Is an LTD Company?

What Is a PLC Company?

Key Takeaways

What Is an LTD Company?

A private company, or an LTD company, is a legal entity that owns its own liabilities, profits and assets. LTD companies can offer shares to stakeholders, but not to the general public. And the personal finances of any shareholders of an LTD company are protected by limited liability.

Basically, this means that any liabilities a shareholder has is limited to the value of their shares in the company. A private company needs to be incorporated with Companies House and there are certain legal documents to submit.

Some of the legal documents include articles of association and even a memorandum of association. As an LTD company, you must appoint at least one director. Directors are usually the primary or sole shareholders and they can have various duties.

What Is a PLC Company?

A PLC is similar to a private company in that they're a distinct legal entity that has its own liabilities, profits and assets. One of the biggest differences is that with a PLC, you can sell and trade shares with the general public. Plus, PLC companies can list their shares on a stock exchange.

PLCs are the only type of business structure that can raise capital from public investment. They must register with Companies House and have a minimum allotted share capital of £50,000. The share capital needs to have been fully paid up to at least 25% and it needs to get reflected in a Certificate for Commencement of Trading.

You can obtain the Certificate for Commencement of Trading from Companies House and a PLC needs to have at least two company directors. Plus, having a secretary that has professional and necessary qualifications is also a requirement.

What Are the Differences Between an LTD and a PLC Company?

While they have some similarities, there are some differences between an LTD company and PLC company worth noting. Let’s start by taking a quick look at a table that compares the two companies.

 

LTD Company

PLC Company

Who supervises?

A private owner, which could be one of multiple

Mostly the government

How are shares transferred?

Not easy to transfer

Easily transferred

How many shareholders are there?

Only private people and citizens

The general public

What about profit?

Look out for own profit

Look out for public profit

You can see that there are already a few distinguishable differences between the two companies. Here are some other main differences worth noting:

  • A public company can offer to sell their shares to the general public
  • There are two directors required for public companies compared to only one for a private company
  • A public company can’t undertake work or perform services in return for an allotment of shares
  • Public companies aren’t able to purchase their own shares out of their own capital
  • Public companies are required to employ a company secretary who has the necessary qualifications
  • A public company only has six months to file their annual accounts, where private companies have nine months
  • Annual general meetings are required for public companies

Key Takeaways

There are benefits to being both an LTD company and a PLC company, it just depends on where your business is heading in the future. One of the key benefits to a PLC is being able to raise capital from selling shares to the public. Plus, going public can generate needed publicity and introduce your company or products to customers.

But, there are some additional legal requirements to follow if you’re a public company. So if you’re a fairly mature company, have an advanced infrastructure or are looking to expand, a PLC company structure might work well.

With an LTD company, it has a private owner and shares aren’t transferable. Its shareholders are private citizens and they are looking out for their own profits. A PLC company, on the other hand, can easily transfer shares and its shareholders are members of the general public. They also look out for public profits.


Did you enjoy reading this guide? Head over to our resource hub for more great content!


RELATED ARTICLES