Business ownership: Public limited companies (plc)

The idea

A public limited company is an incorporated business with 'plc' after its name. It has a separate legal identity and its shareholders have limited liability. Unlike a private limited company, a plc can offer shares to the general public, usually through a stock exchange, so it can raise large amounts of capital. Shares can be bought and sold freely, which makes the business more attractive to investors, but it also means ownership and control can change quickly. A plc must publish its accounts and other information, so competitors and the public can see its financial position. Setting up is expensive and subject to more regulation than a private limited company.

For example: A growing chain could become 'Green Grocers plc', sell shares on the London Stock Exchange and use the funds to open stores nationwide, while original owners may lose some control.

What earns the marks

• States that a public limited company is incorporated and has a separate legal identity from its owners.
• Explains that shares can be advertised and sold to the general public, often through a stock exchange.
• Explains that shareholders have limited liability, so their personal assets are protected.
• Identifies that 'plc' must appear after the company name and that greater regulation and disclosure apply.
• Explains that a plc can raise larger amounts of capital than a private limited company because shares are available to the public.
• Explains that control can be lost or diluted because shares are freely traded and ownership can change.
• Applies the concept to a given business context, such as a firm expanding nationally while accepting public scrutiny.

Common mistakes and how to put them right

• Confusing public limited companies with public sector organisations.

  Put it right: A plc is privately owned by shareholders, not owned by the government.

• Thinking that a plc is always larger than a private limited company.

  Put it right: Size is not the defining feature; the ability to offer shares to the public is.

• Believing that limited liability removes all risk.

  Put it right: Shareholders can still lose the money they invested if the company fails.

• Forgetting that a plc must publish accounts, which can reveal information to competitors.

Exam tips

• Link the ability to sell shares to the public to the scale of finance a plc can raise, using the case study context.
• For evaluation, compare the benefit of large-scale finance with the drawbacks of loss of control and public disclosure.
• Use the correct abbreviation 'plc' and avoid writing 'PLC' inconsistently unless the business name uses that style.
• Refer to the stock exchange by name only if it is relevant to the context, such as the London Stock Exchange.