Public Limited Company

A public limited company, as the name implies, is one in which any member of the public may hold shares. Such a company’s shares are usually quoted on the Stock Exchange and in most instances has hundreds, even thousands of shareholders (although oddly English law only requires a minimum of two). The other type of limited liability company in the UK is the one that has Limited (Ltd) after its name. This indicates that it is a private company whose shares may not be offered to the public at large. Such a company could be a relatively small concern rather like a partnership but where the owners have decided to incorporate the company. Exceptionally, however,
there are some quite large private limited companies where the shareholders have managed to keep the shareholding ‘within the family’. The other case where one¬†encounters ‘Ltd’ rather than ‘plc’ is where the company is a subsidiary of a parent, which owns all the shares in its ‘daughter’. Actually, in the UK and many other countries, the Parent would not own all the shares because Company Law requires a minimum of two shareholders in a Limited Company. This is usually overcome by having one qualifying share either owned by
another subsidiary in the group or owned in the name of an individual director or staff member. If we take the case of the sole trader who turns him or herself into a limited company, we can see most clearly the main characteristic common to all limited liability companies. When a company is incorporated, the owners of it (or ‘members’ as the law always calls them) in effect create an artificial person. It becomes an entity in its own right which will (unlike a sole trader or a partnership) continue even after the death of the original founder and will remain in existence until it is formally wound up.