The Public Limited Companies (PLC) represent one of the most significant institutional innovations in modern economic history. Across corporate law, finance and governance literature, PLCs are characterised by limited liability, separate legal personality, transferable shares, and the ability to raise capital from the public (Kraakman et al., 2017; Davies, 2020). Unlike private limited companies, PLCs may offer shares to the public and are typically listed on stock exchanges, subject to extensive regulatory oversight.
Academic scholarship consistently highlights three core dimensions of PLCs:
- Capital mobilisation at scale
- Separation of ownership and control
- Enhanced governance and disclosure requirements
While PLCs enable large-scale enterprise and economic growth, they also generate governance challenges, including agency problems, short-termism and regulatory complexity (Mallin, 2019; Hopt, 2011).
1.0 What Is a Public Limited Company (PLC)?
A Public Limited Company is a corporate entity incorporated under company law that can sell shares to the public and must meet minimum capital requirements. In the UK, the Companies Act 2006 governs PLCs, requiring a minimum allotted share capital of £50,000 before commencing business (Davies, 2020).
Like all companies, a PLC possesses separate legal personality, meaning it exists independently from its shareholders. This principle, originating from Salomon v A Salomon & Co Ltd (1897), underpins corporate law globally.
For example, multinational corporations such as BP plc or Tesco plc operate as public limited companies, enabling them to raise billions of pounds through equity markets.
2.0 Core Characteristics of PLCs
2.1 Limited Liability
Shareholders’ liability is restricted to the amount unpaid on their shares. This feature encourages investment by limiting personal financial risk (Freedman, 2000). Without limited liability, large-scale capital markets would struggle to function efficiently.
2.2 Transferability of Shares
Shares in a PLC are generally freely transferable, especially when listed on a stock exchange. Kraakman et al. (2017) identify this as one of the defining attributes of corporate law, facilitating liquidity and diversified investment.
For instance, investors can easily buy or sell shares in a listed PLC via the London Stock Exchange, enhancing market efficiency.
2.3 Separation of Ownership and Control
One defining feature of PLCs is the separation between shareholders (owners) and directors (managers). Shareholders provide capital but delegate managerial authority to a board of directors. This arrangement enables professional management but introduces agency problems, where managers may pursue personal interests rather than shareholder value (Monks and Minow, 2011).
2.4 Enhanced Disclosure and Governance Requirements
PLCs must comply with rigorous disclosure obligations, including audited financial statements and adherence to the UK Corporate Governance Code (Tricker, 2020). Transparency protects investors and enhances market confidence.
3.0 Advantages of Public Limited Companies
3.1 Access to Substantial Capital
Perhaps the greatest strength of PLCs is their ability to raise large amounts of capital through public share offerings. This financing capacity supports major infrastructure, research and global expansion.
For example, pharmaceutical PLCs such as AstraZeneca raise funds from global investors to finance long-term drug development programmes.
Guinnane et al. (2007) argue that the corporate form made modern industrial expansion possible by pooling vast amounts of capital from dispersed shareholders.
3.2 Liquidity and Market Valuation
Public listing allows shareholders to convert investments into cash quickly. Share prices reflect market perceptions of performance, providing a continuous valuation mechanism.
3.3 Corporate Prestige and Credibility
Being a PLC often enhances reputation and credibility with suppliers, lenders and international partners. Mallin (2019) notes that public listing signals regulatory compliance and financial transparency.
3.4 Risk Diversification
Because shares are widely held, investors can diversify their portfolios across many PLCs. This diversification reduces individual exposure to firm-specific risk (Kraakman et al., 2017).
4.0 Disadvantages and Challenges
Despite their advantages, PLCs face considerable challenges.
4.1 Agency Costs
The separation of ownership and control can result in conflicts between management and shareholders. Managers may prioritise bonuses, empire-building or short-term share price performance over long-term sustainability (Monks and Minow, 2011).
Hopt (2011) highlights that corporate governance reforms often aim to mitigate these agency costs through independent boards and shareholder voting rights.
4.2 Regulatory and Compliance Costs
PLCs must meet stringent reporting, auditing and governance requirements. These compliance obligations can be expensive and time-consuming (Davies, 2020).
For example, listed companies must produce annual reports, interim statements and comply with stock exchange listing rules, adding administrative burdens not faced by private firms.
4.3 Short-Term Market Pressures
Public markets may encourage short-termism, where management focuses on quarterly earnings rather than long-term innovation. Coffee (1999) argues that securities market pressures sometimes distort managerial decision-making.
4.4 Risk of Hostile Takeovers
Freely transferable shares create the possibility of hostile acquisitions. While takeovers can improve efficiency, they may also destabilise companies and prioritise financial engineering over productive investment.
5.0 Corporate Governance in PLCs
Corporate governance is central to the functioning of PLCs. According to Mallin (2019), governance mechanisms include:
- Board structure and independence
- Audit committees
- Remuneration oversight
- Shareholder voting rights
- Risk management systems
The UK Corporate Governance Code operates on a “comply or explain” basis, encouraging flexibility while promoting accountability (Tricker, 2020).
Ho (2010) discusses the concept of enlightened shareholder value, embedded in UK law, requiring directors to consider long-term consequences and stakeholder interests while promoting shareholder success.
7.0 PLCs and Society
PLCs play a crucial role in economic development, employment and innovation. Bradley et al. (1999) argue that corporations sit at a crossroads between private enterprise and public accountability. As large employers and taxpayers, PLCs influence social and environmental outcomes.
For instance, energy PLCs face pressure to balance profitability with environmental responsibility. Governance reforms increasingly incorporate sustainability reporting and ESG (Environmental, Social and Governance) standards.
8.0 Theoretical Perspectives
Several theoretical frameworks illuminate PLCs:
- Agency Theory – Explains conflicts between shareholders and managers (Kraakman et al., 2017).
- Stakeholder Theory – Advocates broader corporate responsibility (Ho, 2010).
- Comparative Governance Theory – Examines differences between UK, US and European corporate models (Hopt, 2011).
- Legal Institutionalism – Highlights how corporate law shapes economic behaviour (Davies, 2020).
These perspectives reveal that PLCs are not merely legal forms but dynamic governance institutions embedded within broader social systems.
The Public Limited Company (PLC) stands at the heart of modern capitalism. Its defining characteristics — limited liability, transferable shares, separation of ownership and control, and access to public capital markets — enable large-scale enterprise and global economic integration.
However, PLCs also face significant challenges, particularly regarding agency conflicts, regulatory burdens and market pressures. Effective corporate governance is therefore essential to ensure accountability, transparency and sustainable value creation.
Ultimately, PLCs combine entrepreneurial opportunity with public responsibility. Their success depends not only on legal structure but on ethical leadership, robust governance systems and long-term strategic vision.
References
Bradley, M., Schipani, C.A., Sundaram, A.K. and Walsh, J.P. (1999) ‘The purposes and accountability of the corporation in contemporary society’, Law and Contemporary Problems, 62(3), pp. 9–86.
Coffee, J.C. Jr (1999) ‘Privatization and corporate governance: The lessons from securities market failure’, Journal of Corporation Law, 25(1), pp. 1–39.
Davies, P. (2020) Introduction to Company Law. Oxford: Oxford University Press.
Freedman, J. (2000) ‘Limited liability: large company theory and small firms’, The Modern Law Review, 63(3), pp. 317–354.
Guinnane, T., Harris, R., Lamoreaux, N.R. and Rosenthal, J.L. (2007) ‘Putting the Corporation in its Place’, Enterprise & Society, 8(3), pp. 687–729.
Hopt, K.J. (2011) ‘Comparative corporate governance: The state of the art and international regulation’, The American Journal of Comparative Law, 59(1), pp. 1–73.
Ho, V.H. (2010) ‘Enlightened shareholder value: Corporate governance beyond the shareholder-stakeholder divide’, Journal of Corporation Law, 36(1), pp. 59–112.
Kraakman, R., Armour, J., Davies, P., Enriques, L., Hansmann, H., Hertig, G., Hopt, K., Kanda, H. and Rock, E. (2017) The Anatomy of Corporate Law: A Comparative and Functional Approach. 3rd edn. Oxford: Oxford University Press.
Mallin, C.A. (2019) Corporate Governance. 6th edn. Oxford: Oxford University Press.
Monks, R.A.G. and Minow, N. (2011) Corporate Governance. 5th edn. Chichester: Wiley.
Tricker, B. (2020) The Evolution of Corporate Governance. Cambridge: Cambridge University Press.
