The primary reason for a private limited company to re-register as a public limited company is to give it the ability to offer shares to the public.
The procedure to re-register from a private limited company (LTD) to a public limited company (PLC) is straightforward, but there are certain criteria that must be met. These regard share capital and net asset requirements and are set out in sections 91 and 92 of the Companies Act 2006.
Once the above are satisfied the following documents must be be prepared, signed and filed at Companies House:
- Special resolutions
- Articles of association
- Statutory forms
- Financial documents
A recent example from earlier this year of the success and advantages of re-registration is demonstrated by the well-known British chocolatier, Hotel Chocolat Group PLC (HCG).
HCG was originally founded in 2003 under a different company name, and was then incorporated as Hotel Chocolat Limited in 2013 and earlier this year made the decision to re-register as a PLC and admit its shares to trade on the Alternative Investment Market (AIM) of the London Stock Exchange. AIM is the London Stock Exchange’s international market for smaller growing companies. A wide range of businesses join AIM seeking access to growth capital.
Since their re-registration and admission to AIM, the profits and revenue of HCG have significantly increased. However, with great rewards it follows that there are significantly greater responsibilities of a company with PLC status. Some of these are as follows:
- Nominal value of the issued share capital must be not less than the authorised minimum, which is currently £50,000 or the prescribed euro equivalent
- No shares can be issued unless at least one quarter of the nominal value and the whole of any premium on it has been paid up
- Prohibited from a purchase of own shares, redeeming shares and reducing the share capital
- Subject to the Takeover Code (rules for the regulation of takeovers of companies)
- Have at least two directors, a qualified company secretary and annually appoint auditors
- Hold annual general meetings
- Laying of accounts at general meetings
Clearly, the above outlines the administrative burdens and shows that careful consideration must be taken before changing a company status. However, the success of HCG demonstrates that it can be worthwhile and literally pay dividends.
Is your company ready for AIM?
Our legal and corporate governance experts can assist with the re-registration of your company, the document verification process included in AIM applications and supporting your business throughout admission into this market. If you’d like more information about this process, please get in touch.