public company

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A type of registered company that can offer its shares to the public (Companies Act 2006 s 4; compare private company). Its certificate of incorporation must state that it is a public company (s 761), that its name ends with the words “public limited company” or plc (s 58), and that its authorized capital is at least the authorized minimum (£50,000 or prescribed euro equivalent: s 763). It cannot do business until it has allotted shares with a nominal value corresponding with the authorized minimum (s 761). It cannot allot shares except upon payment of one-quarter of their nominal value plus any share premium (s 586). £12,500 is therefore its minimum capital. It thus may not have much wealth or substance, although many assume the contrary. Under the Companies Act 2006 an undertaking to do work or perform services is not an acceptable consideration for shares in a public company (s 585), and other non-cash considerations are subject to independent valuation. See also flotation; Stock Exchange.

Subjects: Law.

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