What is a Private Limited Company (LTD)?
A private limited company is the most common company structure in the UK with over 5 million private limited companies operating in the UK in 2024.
A private limited company is typically owned in by either individual(s) or an organisation(s), thereby making them the owners of the company although the company itself is managed by the appointed directors, who are commonly the the same party as the owner of the private limited company. As a private limited company the shares within the company are not available for the public to purchase, they are only available to be purchased by negotiating directly with the company or any existing shareholders.
What is a Public Limited Company (PLC)?
A public limited company is a company structure which is typically used by larger companies and this is typically done to raise significant funds by selling shares (ownership) in their company on a stock exchange. A UK public limited company could decide to list on either the London Stock Exchange (LSE) which is commonly used by larger companies or on the Alternative Investment Market (AIM) which is where smaller companies that are growing may decide to list. Meaning that any individual or organisation that has purchased shares in a public limited company on a stock exchange then becomes one of many shareholders in the company.
The public limited company structure is less common in the UK with roughly 4,000 active public limited companies registered with Companies House. This is due to the added costs of being a listed company, additional compliance with more stringent regulations, enhanced financial reporting requirements and finally, the most influential reason fewer entities incorporate a public limited company is the reduction of control that the founders have over the decision making.
Key Differences Between Public & Private Limited Companies
| Category | Public Limited Company | Private Limited Company |
| Ownership and Control of the Company | As a public limited company, it can offer shares on a traded stock exchange which are available for purchase by the public Ownership and control are often separate with the shareholders maintaining ownership and the directors that are in post manage (Control) the entity | All shares are owned privately by either an individual, group of individuals or organisation Typically, a private limited company is managed by the owner(s) making them the shareholders. If the shareholders and directors are separate parties then the shareholders are typically more involved in the operation of the business |
| Issued Share Capital Requirements | Required to issue a minimum of £50,000 of share capital with at least 25% (£12,500) being paid | There is no minimum requirement for Share Capital |
| Company Directors and Secretaries | There must be at least 2 directors and it is a mandatory requirement that the company has at least 1 qualified company secretary | At any given point in time there must be at least 1 director of the company but there is no requirement putting a company secretary in post |
| Annual General Meeting | It is mandatory for a public limited company to hold an Annual General Meeting once a year as an annual platform for shareholders, members and stakeholders to review performance and discuss future matters | Unless clearly outlined in the Articles of Association a private limited company is not required to hold an annual general meeting |
Trading Certificate (A certificate granted by Companies House providing permission to commence business activities and borrowing powers) | A public limited company is must have received a trading certificate directly from Companies House before it is able to start its business and borrow funds | Can start trading immediately after receiving its Certificate of Incorporation from Companies House |
| Regulatory Oversight | Must comply with all laws outlined in the Companies Act 2006, but as public companies are listed on a stock exchange, they would have stricter oversight For example, a PLC listed on the London Stock Exchange would need to comply with additional regulations from the Financial Conduct Authorities
| Is primarily regulated under the Companies Act 2006 |
| Public Disclosures | As a public company there is a high level of public disclosures that are required, especially if the company is listed | Less disclosure to the public is required |
Similarities Between Public & Private Limited Companies
Compliance
Both public limited companies and private limited companies are governed by and must comply with laws that are outlined within the Companies Act 2006 which has the main purpose of improving transparency and accountability, enhancing shareholder rights and providing clear details of the duties of limited company directors.
Limited Liability
As both structures are limited they both have a benefit from limited liability. This means that the shareholders of the company are only responsible for the company’s debts up to the total sum of money they have invested, typically meaning the value of their shares in the company. This therefore protects the investors from being liable if the company goes bankrupt, is sued or it owes an excess of money to parties.
Company Registration
Another aspect that both a public and private limited company have in similar is that they are registered directly with Companies House, meaning that they must both file their Annual Accounts to Companies House on a yearly basis with some differences between the filing requirements. For example, a public company is required to undergo a Statutory Audit no matter its turnover, whereas a private limited company is only required to undergo a Statutory Audit as long as it is larger than a small company.
