9 Benefits of UK PLC

Even after Brexit, the UK PLC has many advantages - especially compared to the AG. We have put together the 9 most important advantages of UK PLC for you here.

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Advantage 1: Low minimum amount of share capital

The minimum share capital when founding the PLC is just £50,000 (approx. €55,000; AG: €100,000). At least 25% of this, i.e. £12,500, must be paid into the company's account. Capital increases are also possible relatively easily through contributions in kind.

Advantage 2: Share capital in any currency

The share capital of the PLC company form (Public Limited Company) can be managed, for example, in pounds, euros, US dollars. This allows you to protect yourself from potential currency risks, but also, for example, to define different share classes in different currencies. This can be useful if you plan dual listings on multiple international stock exchanges.

Advantage 3: More than one class of shares possible

Anyone who wants investors to invest in their company is usually interested in not giving these external investors any say in the company. Here the PLC offers the option of dividing the share capital into more than one class of shares (“alphabet shares”). The shares that you issue to investors are then non-voting shares. The subscribers are also not invited to the company's general meeting. Caution: Experienced investors will often not get involved in non-voting shares!

Example: Mr. Dronke sets up a PLC with initially 650,000 founder shares at €0.10 each. They have full voting rights. 100% of the founder shares (share class A) belong to Mr. Dronke. Mr. Dronke is now raising €10 million in capital from 20 investors. These do not receive founder shares, but rather shares of class B. These are defined in the company's articles of association as non-voting shares. Investors now have no say in the company, but they do have the right to receive dividends.

Advantage 4: Low share par valueert

The par value per share can be £0.01 in the PLC. The AG requires a nominal value of at least €1. A low nominal value has the advantage that you can issue more shares. However, many of our clients do not want to give the impression of a “junk share” and therefore opt for a nominal value of £0.10 or €0.10.

Advantage 5: Comparably simple capital increase via contribution in kind

With a capital contribution in kind, the shares of the PLC are not paid for in cash during a capital increase, but rather with an asset. This is particularly interesting if you want to contribute investments to the PLC via share swap. The PLC has the advantage here that a complex valuation report is not required according to German understanding. A DCF valuation from your auditor is sufficient. The capital increase is fully reflected in the balance sheet.

Example: You have a German GmbH that is valued at €10 million according to DCF. You hand over your shares in the GmbH to your PLC holding company. This carries out a capital increase and increases its share capital by €10 million. In return for your GmbH shares, you will receive shares in the PLC worth €10 million. By the way, there is no withholding tax or capital gains tax. After the transaction, the PLC is worth €10 million more according to its balance sheet total.

Advantage 6: Tangible tax advantages

The UK PLC can be used well for tax planning in conjunction with a tax-efficient residence. This is particularly due to the fact that no withholding tax is paid on dividends in the UK and there is an attractive participation exemption.

Example: Günther lives inMallorca and uses it thereBeckham Law Status. He founded a UK PLC, which in turn became a companySwitzerland founded. The Swiss AG makes a profit of 1 million euros. In Switzerland, 15% profit tax is due. The DTA between UK andSwitzerland does not provide for withholding tax. UK PLC therefore receives the net profit of 850,000 euros as a dividend and distributes this in full to Günther. There is no further taxation in the UK, nor inSpain with Günther under Beckham Law. So in total only 15% taxes are due.

Advantage 7: Over-the-counter electronic issue of shares

The shares of PLC can also be transferred electronically over-the-counter as part of private placements to all common depots (e.g. at Consors, Sparkasse, Volksbank, etc.). You don't need a broker, a bank, a market maker or any other third party. The shares are issued directly by the issuer (i.e. the PLC). These are new shares and there is no change of ownership. The issue of shares is therefore tax-neutral.

Advantage 8: Ideal vehicle for an IPO

If you request a initial public offering If you consider the company, UK PLC is the ideal vehicle. Virtually all exchanges are familiar with and prepared for PLCs. The language of the PLC is English, which all parties involved in the IPO understand. The infrastructure for electronic stock trading is well developed in the UK and is accessible to a large number of service providers. And since there is no withholding tax in Great Britain, the location is very attractive, especially for investors based in low-tax countries. Dividend distributions are therefore completely tax-free in the UK.

Advantage 9: Worldwide Acceptance & international flair

The PLC as a legal form is widespread. You will have no difficulty finding, for example, lawyers and other consultants who can competently support your PLC. Since all internal processes are documented in English, you are transparent to investors, trading partners, banks, etc. worldwide. Common law applies in Great Britain - the same legal system as in the USA, Canada, Australia and many former British colonies. Here, a PLC stands out clearly from the legal forms used in German-speaking countries. And with a headquarters in London, your PLC is at home in the capital of the world.

 

Also interesting:

• What are actually the differences between UK PLC & UK Limited?

• UK Holding & EU withholding tax on dividends after Brexit

• The British Transparency Register (People with Significant Control Register)

• Accounting & Audit for your UK PLC

• Tax-optimized contribution of companies or shares into a British Public Limited Company (UK PLC) as a holding company

• DCF company valuation - This is how the discounted cash flow method works

 

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Get individual advice on UK PLC, IPOs and capital raising.

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