{"id":173841,"date":"2022-08-08T07:35:38","date_gmt":"2022-08-08T06:35:38","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=173841"},"modified":"2026-03-30T02:13:24","modified_gmt":"2026-03-30T01:13:24","slug":"public-vs-private-company","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/public-vs-private-company\/","title":{"rendered":"What Is the Difference Between a Public and Private Limited Company in England?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">Public and private limited companies operate under very different legal frameworks, and understanding the distinction is essential before deciding how to structure or grow your business. The key difference lies in whether a company can offer its shares to the public, which brings with it significant additional obligations. This article will provide an overview of the key differences between public and private companies.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Public Companies&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Interestingly, the law defines private companies as those companies that are not <\/span><a href=\"https:\/\/legalvision.co.uk\/startups\/startup-public-private\/\"><span style=\"font-weight: 400\">public companies<\/span><\/a><span style=\"font-weight: 400\">. Therefore, when comparing the two, we can define private companies entirely in opposition to public companies.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">As mentioned, public companies are not required to list on the stock exchange. From a legal perspective, you can think of public companies as those that have complied with all the additional requirements and rules that enable them to sell their shares to the public. These rules aim to promote increased transparency.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">There are over 6,000 public companies in the UK, with many of the largest companies in the UK being public, including:<\/span><\/p>\n<ul>\n<li>HSBC;<\/li>\n<li>Lloyds; and<\/li>\n<li>Unilever.<\/li>\n<\/ul>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Advantages of Public Companies<\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Raising Public Equity<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">For many private companies, it is hard to raise equity financing unless they are willing to sell a substantial number of shares to accredited private investors, like private equity and <\/span><a href=\"https:\/\/legalvision.co.uk\/startups\/venture-capital-funding\/\"><span style=\"font-weight: 400\">venture capital funds<\/span><\/a><span style=\"font-weight: 400\">. This is because it is illegal for the directors of a private company to offer their shares to the public.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If a court finds that a private company has offered its shares to the public, it has great power to penalise the company. Therefore, one of the main advantages of trading through a public company is that you can raise more money by selling your shares to the public.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Prestige&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Since the rules for listing your company\u2019s shares on a public market are quite onerous, public companies are fewer and farther. In a sense, they are more prestigious. Your company may therefore find it easier to raise both <\/span><a href=\"https:\/\/legalvision.co.uk\/corporations\/difference-between-debt-and-equity-investment\/\"><span style=\"font-weight: 400\">debt and equity financing<\/span><\/a><span style=\"font-weight: 400\"> simply because it is a public company.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Listing Shares on the Stock Market&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">By virtue of being a public company, you can offer your shares to the public. One of the best ways to do this is to list them on one of the two exchanges in the UK:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">Main Market of the London Stock Exchange; and<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">Alternative Investment Market (AIM).<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">The Main Market has more onerous listing requirements than the AIM, and it is easier to raise money on the Main Market. Still, both markets make it easier to raise equity than a private company.&nbsp;<\/span><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    <script>\nvar 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Likewise, a public company must provide shareholders with more information.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">For instance, there must be at least two directors of a public company, whereas, for a private company, you can be the sole director of a company. The premise is that if your company is going to offer its shares to the public, most of the shareholders will not have the capacity or ability to be directly involved in the affairs of the company. Therefore, the law protects the public shareholders\u2019 interests by requiring the company\u2019s officers (i.e. its directors and secretary) to operate with more rigour.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Public vs Private Company<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">We will now go on to explore how administering a public company differs from a private one.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Accounts<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">The law requires public companies to file their accounts more frequently than private companies. The company\u2019s accounts must likewise be presented at a general shareholder meeting within six months of being due.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Limits on Directors\u2019 Powers&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Compared to private companies, the law restrains some of the powers of public company directors. In particular, shareholders must approve any loan made to a director by a public company. However, directors of public companies will still have more reporting requirements than shareholders.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Secretary&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">A public company must have a secretary in addition to at least two directors. <\/span><span style=\"font-weight: 400\">Their exact duties will depend on the company. Still, in general, company secretaries are responsible for ensuring that the <\/span><a href=\"https:\/\/legalvision.co.uk\/corporations\/directors-duties\/\"><span style=\"font-weight: 400\">directors comply with their duties<\/span><\/a><span style=\"font-weight: 400\">, such as ensuring that shareholder and director meetings are appropriately administered.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">Private companies are free to have a secretary, but the law does not require it.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Restrictions on Share Capital&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Share capital refers to the amount of money within a company that belongs to the shareholders. For public companies, there must be at least \u00a350,000 worth of share capital, and this amount must be fully \u201cpaid up\u201d. This means that the shareholders must have actually paid the company for their shares.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">A public company cannot reduce the share capital under this amount by paying themselves dividends.<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">There are also limits on the consideration shareholders can provide the company in exchange for shares. In practice, shareholders will be restricted to cash or cash equivalents unless they obtain a report on the true value of the consideration.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">For example, suppose directors wanted to issue a shareholder 100 shares for a piece of intellectual property. In this situation, an accountant or other qualified valuer would have to certify that the intellectual property is worth 100 shares in the company.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">City Code on Takeovers and Mergers&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">The <\/span><a href=\"https:\/\/www.thetakeoverpanel.org.uk\/the-code\"><span style=\"font-weight: 400\">City Code on Takeovers and Mergers<\/span><\/a><span style=\"font-weight: 400\"> is a large collection of rules on how one company can purchase another company. The City Takeover Panel, which is a quasi-public body, is responsible for enforcing the Code.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If a company is public, it is subject to the Code. Meanwhile, private companies are usually exempt.&nbsp;<\/span><\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2024\/07\/16031510\/Screenshot-2024-07-16-at-12.14.57%E2%80%AFPM.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">UK Directors Duties<\/div>\n            <div class=\"body-text\">\n                <p>Understand your role as a director and how to meet your legal obligations. Download our free guide today.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.uk\/uk-directors-duties.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p><strong>Key Statistics<\/strong><\/p>\n<ol>\n<li><strong>6,147:<\/strong> The number of public limited companies (PLCs) registered in the UK as of December 2024, representing just 0.13% of all UK companies, whilst private limited companies account for 99.87% with over 4.8 million registered.<\/li>\n<li><strong>\u00a350,000:<\/strong> The minimum share capital requirement for UK public companies, which must be fully paid up, compared to private companies which can be incorporated with share capital as low as \u00a31.<\/li>\n<li><strong>\u00a32.4 million:<\/strong> The average annual compliance and regulatory costs for UK public companies listed on the Main Market in 2023, including audit fees, reporting requirements, and regulatory filings, compared to \u00a38,400 for private companies.<\/li>\n<\/ol>\n<p><strong>Sources:<\/strong><\/p>\n<!-- wp:paragraph {\"fontSize\":\"small\"} -->\n<ol>\n<li>Companies House, <em>Statistical Tables on Companies Registration Activities<\/em>, December 2024.<\/li>\n<li>Companies Act 2006, Section 763; and UK Government, <em>Incorporation and Names Guidance<\/em>, 2024.<\/li>\n<li>Financial Reporting Council (FRC), <em>Corporate Governance Compliance Costs Survey<\/em>, 2023; and Grant Thornton UK, <em>Cost of Being Public Report<\/em>, 2024.<\/li>\n<\/ol>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Public companies are those that meet the requirements to list their shares to the public. While it is not a requirement for public companies to sell their shares on a UK stock exchange, most do because it grants them access to the public equity market. Many companies go public by listing as a public company after they have completed all the necessary steps to do so. As a result, they are subject to far more regulations and regulatory scrutiny compared to private companies.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need further guidance, <\/span>LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced <a href=\"https:\/\/legalvision.co.uk\/corporate-lawyers-lp\/\"><span style=\"font-weight: 400\">corporate lawyers<\/span><\/a> help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee.\u00a0To learn more about LegalVision\u2019s legal membership, call <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or\u00a0<a href=\"https:\/\/legalvision.co.uk\/membership\/\" target=\"_blank\" rel=\"noreferrer noopener\">visit our membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1659940132389\"><strong class=\"schema-faq-question\"><strong>What is a public company?<\/strong><\/strong> <p class=\"schema-faq-answer\">A public company is a company that the law permits to offer its shares to the public. Importantly, a public company does not have to be listed on a stock exchange to be a public company, though most companies choose to do so.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1659940142451\"><strong class=\"schema-faq-question\"><strong>What is the difference between a public company and a private one?<\/strong><\/strong> <p class=\"schema-faq-answer\">Other than having the right to sell its shares to the public, public companies are much more regulated than private companies. For example, they must make more information about its dealings available to the public. There are also restrictions on the powers of directors of public companies.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1774833041579\"><strong class=\"schema-faq-question\">What is the minimum share capital requirement for a public company in the UK?<\/strong> <p class=\"schema-faq-answer\">Public companies must have at least \u00a350,000 worth of share capital, which must be fully paid up. A public company cannot reduce its share capital below this amount by paying dividends to shareholders.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1774833056248\"><strong class=\"schema-faq-question\">Are public companies subject to the City Code on Takeovers and Mergers?<\/strong> <p class=\"schema-faq-answer\">Yes, public companies are subject to the City Code on Takeovers and Mergers, enforced by the City Takeover Panel. Private companies are generally exempt from these rules governing how one company can purchase another.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/173841\" \/>            <input value=\"https:\/\/legalvision.co.uk\/corporations\/public-vs-private-company\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"What Is the Difference Between a Public and Private Limited Company in England?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Public and private limited companies operate under very different legal frameworks, and understanding the distinction is essential before deciding how to structure or grow your business. The key difference lies in whether a company can offer its shares to the public, which brings with it significant additional obligations. This article will provide an overview of<a href=\"https:\/\/legalvision.co.uk\/corporations\/public-vs-private-company\/\">Continue reading <span class=\"sr-only\">&#8220;What Is the Difference Between a Public and Private Limited Company in 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