What's the Difference Between Public & Private Limited Company [Explained]

Starting a business in the UK? One of the first big decisions you’ll face is choosing the right company structure.

You’ve probably come across the terms Public Limited Company (PLC) and Private Limited Company (Ltd).

But what do they actually mean, and why does it matter which one you pick?

Read on to learn about the difference between a public and a private limited company, so you can see which structure might suit your goals best.

Understanding Public Limited Companies: Definition and key characteristics

A Public Limited Company (PLC) is a legal business structure under UK company law that allows a company to offer its shares to the public, typically by listing on a stock exchange.

This structure enables the company to raise capital from public investors and institutional shareholders.

Think of a PLC as a business that’s open to the public where anyone can buy a slice of it through shares.

With strict rules and public reporting, it can raise big funds and grow quickly, while keeping shareholders’ personal money safe.

For example, think of a popular coffee chain going public.

By becoming a PLC, it can sell shares to everyday investors, raise funds to grow, and keep owners’ personal money protected, all while sharing updates on its progress.

Key characteristics of PLC

To understand what sets public limited companies apart, it helps to look at their key characteristics, from share trading to regulatory requirements.

✨ Share trading: A PLC can sell shares to the general public, often through stock exchanges, such as the London Stock Exchange (LSE).

✨ Share capital: under the Companies Act 2006, a PLC must have a minimum share capital of £50,000, with at least 25% (£12,500) paid up before beginning to trade. This means much bigger financial requirements than starting an Ltd.

✨ Regulatory oversight: PLCs don’t operate on their own. They’re governed by the Companies Act 2006 and, if they’re listed on a stock exchange, they also fall under the watchful eye of regulators, such as the Financial Conduct Authority (FCA).

✨ Company name suffix: The name must end with 'public limited company', 'PLC', or 'plc', to mark its public status.

✨ Trading certificate: Before starting trading, a PLC must obtain a trading certificate from Companies House, confirming compliance with all regulatory requirements. To do so, you need to fill out the SH50 form.

✨ Transparency and reporting: Subject to rigorous reporting standards, including independent audits, detailed annual accounts, annual general meetings (AGMs), and detailed published financial statements. This way, the PLC ensures transparency for shareholders and the public.

Other requirements and responsibilities include:

• PLCs must hold an AGM within six months of the financial year-end for essential shareholder voting.
• Also, you must submit annual accounts to Companies House within six months after the year-end.
• PLCs have to announce key events and financial updates that may affect the share price.

✨ Corporate officers: The PLC must have at least two directors (compared to one director for private limited companies) and must appoint a qualified company secretary, a role not mandatory for private companies.

✨ Legal identity: The company is a separate legal entity from its shareholders, offering limited liability protection. It means investors' financial risk is limited to the amount they invest.

Key advantages and disadvantages of a public limited company

While PLCs can offer significant advantages, they also involve drawbacks. Let’s have a closer look.

🟢 Access to capital: PLCs can raise significant funds by issuing shares to the public on stock exchanges. As a result, it can lead to rapid growth and expansion.

🟢 Share liquidity: Shares can be freely traded on public markets, offering investors more flexibility to buy and sell.

🟢 Market prestige: Being listed on a stock exchange (or even just having PLC status) signals stability and transparency, which can boost trust among customers, suppliers, and investors.

🟢 Succession and continuity: Ongoing share trading allows the company to outlive individual founders and owners.

🟢 Acquisition currency: PLCs can use their shares to acquire other companies.

🟢 Limited liability: Like other limited companies, shareholders’ personal finances are protected. They only risk the money they invested.

🔴 Cost and compliance: PLCs face much higher regulatory and reporting burdens, including mandatory audits, detailed disclosures, and adherence to FCA rules.

🔴 Loss of control: By offering shares to the public, founders risk dilution of their ownership. Shareholders can vote on major decisions and, in some cases, influence the direction of the company.

🔴 Public scrutiny: Financial results, leadership decisions, and strategies are under constant analysis and media attention.

🔴 Short-term pressures: Pressure from shareholders for quarterly returns can shift focus to short-term gains over long-term strategy.

A PLC offers the advantage of raising capital widely and providing shareholders with liquidity.

However, this comes with increased regulatory oversight, higher compliance costs, and transparency obligations.

Understanding Private Limited Companies: Definition and key characteristics

A Private Limited Company (Ltd) is the most common type of company structure in the UK.

It’s a legal entity in its own right, separate from its owners (the shareholders) and managers (the directors).

This separation means the company can own property, enter into contracts, and be sued in its own name.

Unlike a PLC, a private limited company can’t offer its shares to the general public through a stock exchange.

Instead, a small group of people, such as family, friends, or business partners, keeps

Ownership.

You can think of it as a company with its own separate identity.

It can have its own bank account, sign contracts, and even face legal issues without affecting the owners’ personal money.

For example, a small family-run bakery becomes an Ltd. What does it mean in reality?

The owners keep full control, their personal savings are protected, and they can run the business professionally without selling shares to the public.

Key characteristics of Ltds

Understanding the key characteristics of Ltds helps highlight why many small and medium businesses prefer this structure over a PLC.

✨ Separate legal entity: The company exists separately from its owners and directors. It can own property, enter into contracts, sue or be sued in its own name.

✨ Limited liability: Shareholders' liability is limited to the amount they have invested in shares. Their personal assets are protected from the company’s debts or legal actions.

✨ Shares and ownership: Shares can’t be sold to the public and are usually transferred privately, often requiring approval from other shareholders. A private limited company can have up to 50 shareholders.

✨ Minimum requirements: Only one director is required to manage the company. A company secretary is optional.

✨ No minimum share capital: Unlike public limited companies, Ltds don’t have a statutory minimum share capital requirement.

✨ Privacy: Financial and ownership information is less public than PLCs, offering confidentiality and control over company affairs.

✨ Incorporation: Must be registered with Companies House, submitting a Memorandum and Articles of Association.

✨ Company name: Must end with “Limited” or “Ltd” to signal its status.

✨ Regulation and reporting: Subject to the Companies Act 2006, with annual filing of accounts and confirmation statements. The reporting obligations are lighter than for PLCs. Annual accounts must be filed within nine months of the year-end, and there is no mandatory audit unless turnover exceeds £ 10.2 million.

Also, you aren’t required to hold AGMs unless the articles of association state otherwise.

✨ Flexibility: Often preferred for startups, small to medium businesses, and family-owned companies due to its simplicity and control.

✨ Restrictions on share transfer: Unlike PLCs, Ltd shares can’t be sold freely on the stock market; transfer usually requires approval, maintaining a tight ownership structure.

✨ Tax efficiency: Potential benefits include corporation tax treatment and the opportunity to pay dividends alongside salaries for tax planning.

Main advantages and disadvantages of a private limited company

Public limited companies come with both opportunities and challenges.

🟢 Limited liability protection: As a shareholder, you only risk what you put into the company.

Your personal assets, such as your home or savings, aren’t at risk if the business runs into debt or legal issues.

🟢 Professional image: Running as an Ltd gives your business extra credibility. It signals stability, which can make it easier to win over customers, investors, and suppliers.

🟢 Tax efficiency: Ltds pay Corporation Tax on profits, which is usually lower than personal income tax.

Directors can also mix salary and dividends to reduce personal tax bills.

🟢 Easier funding options: An Ltd can raise funds by bringing in private investors or securing bank loans. Lenders and investors often see Ltds as lower risk.

🟢 Name protection: Once you register your business with Companies House, your company name is legally protected across the UK, so no one else can use it.

🟢 Flexible income: Owners can choose how they pay themselves: through dividends, pensions, or a mix of income streams, giving more flexibility.

🟢 Pension perks: Ltds can offer company pension schemes with tax-deductible contributions, making retirement planning easier and more tax-efficient.

🔴 Limited access to capital: Unlike PLCs, Ltds can’t sell shares to the public or list on a stock exchange.

Funding usually comes from founders, family, or private investors, which can restrict big growth plans.

🔴 Harder to trade shares: Shares in an Ltd aren’t freely tradable. Transfers often need approval from other shareholders, making them less liquid and less attractive for employee share schemes.

🔴 Lower profile: PLCs tend to carry more prestige and visibility. Being an Ltd may not have the same weight when it comes to brand image, partnerships, or attracting large-scale investors.

🔴 Slower growth potential: With fewer funding options and less exposure, Ltds may find it harder to scale quickly or take on major acquisitions.

🔴 Shareholder conflicts: Ownership is tightly held in Ltds, which can sometimes spark disputes among a small group of shareholders, without the same regulatory frameworks that PLCs have.

🔴 No public market for shares: Without a stock exchange listing, shareholders have fewer ways to cash out or sell their stake compared to PLC investors.

A private limited company combines limited liability protection with operational privacy and control, making it an ideal structure for SMEs.

It is simpler and less costly to maintain than a public limited company, but offers less opportunity for raising capital through public markets.

Difference between public and private limited companies: Which structure fits your business?

Choosing between a private and public limited company in the UK comes down to how much control, funding, and visibility you want for your business.

Let’s recap.

While Ltd's offer privacy, control, and simpler administration, they lack the funding scale, share liquidity, and public market advantages that PLCs enjoy.

In return, this can limit their growth and investment attractiveness.

ANNA Money: Your trusted partner regardless of your company’s setup

ANNA Money is an all-in-one business account for managing finances, invoicing, expenses, bookkeeping, and taxes, as well as assisting with company registration.

We handle registration requirements, documentation (such as Memorandum and Articles of Association), and compliance with Companies House.

Thus, you can register your company within one day, with the Companies House fee on us.

What key solutions do we offer besides company formation?

🔥Banking and financial administration: We provide smart business current accounts specifically designed for UK companies, enabling fast, digital payments, receipt management, and expense categorisation.

Integrated invoicing and receipt capture make financial management more efficient, reducing administrative burden.

🔥 Tax and accounting support: Easy-to-use tools and resources to handle Corporation Tax, VAT, and payroll, designed for limited companies and working smoothly with accounting systems.

The support includes real-time notifications and deadlines for tax filings, which is crucial given the more complex reporting duties of Ltd's and PLCs.

🔥 Compliance: We assist with statutory filing requirements, such as confirmation statements, helping limited companies meet statutory deadlines and avoid penalties.

🔥 Expense management and payroll: Our solutions automate payroll scheduling and employee expense tracking, putting business owners in control and ensuring compliance with HMRC requirements.

Ready to see ANNA Money in action?

Try ANNA today and take the stress out of managing your limited company’s finances, taxes, and accounting.