Share capital of a PLC
A public limited company must start with a minimum amount of share capital – unlike a private limited company. This guide explains the rules, the main share classes and what you may do with the money.
Amount and paying in – the quarter rule
A PLC must have allotted shares with a total nominal value of at least £50,000. Each share must be paid up to at least a quarter of its nominal value plus the whole of any premium. Only when this is confirmed does Companies House issue the trading certificate the PLC needs before doing business.
Shares and control
Ordinary shares usually carry votes and dividends; preference shares can give priority on dividends or on a sale, often with limited voting rights. When new shares are issued for cash, existing shareholders generally have pre-emption rights, which can be disapplied by special resolution. The rights of each class are set out in the articles of association.
Use after formation
Once paid, the capital is the company’s money and can be used for business purposes. It may not be returned to shareholders freely: distributions require distributable profits, and a reduction of capital must follow the formal procedure under the Companies Act 2006.
Frequently asked questions
How much capital does a PLC need?
Allotted shares with a nominal value of at least £50,000, of which at least a quarter – £12,500 – must be paid up before the company can obtain its trading certificate.
Is the share capital of a PLC lost money?
No. It belongs to the company and finances its business. It is only “tied” in the sense that it cannot be paid back to shareholders without distributable profits or a formal capital reduction.
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