Public company

A public company is a company whose shares are available to be purchased on the open market, usually one of the major stock markets.

In the UK, public companies are denoted by the acronym PLC after the name of the company, e.g. J Sainsburys PLC. PLC stands for Public Limited Company.

The term limited in 'Public Limited Company' refers to limitation of liability. This has two primary consequences:

  • Shareholders can only lose what they invest and are not liable for further losses of the company.
  • Shareholders cannot be legally pursued for debts, fraud allegations or similar liability, except where the shareholder is a board member.

A public company is the opposite of a private company, whose shares are not permitted to be purchased by the general public. A private company must meet several criteria before it is permitted to become public.

Private companies in the UK are denoted with 'Ltd' or 'Limited' after their name, an acronym for 'Limited Company'. Once again, the term 'limited' refers to limited liability.

A common misconception is that PLCs (which make up the FTSE including the FTSE100) are the UK's largest companies. In actual fact, there are many privately owned companies whose value far exceeds any PLCs. These companies will be owned by proprietors, families and private equity holders.