Appendix A

Differences between Private and Public Companies

Broadly speaking the difference between a private and public company is that,
assuming the public company satisfies the conditions for listing, its shares can be
listed on a recognised stock exchange, allowing the business to raise capital
relatively quickly and easily by allowing members of the public to buy shares. It
should be noted that not all Public Limited Companies (PLC's) are listed on a stock
exchange, this is because the conditions for listing are relatively stringent and
therefore onerous on the business.
The differences between private and public companies is set out in more detail
below:
the directors of a private company usually control at least the majority of its
shares.
Shares in a private company are rarely traded as it is difficult to accurately
establish a share value, and there is no established market place for them.
It is common for private companies not to pay a share dividend due to them
holding at least the vast majority of shares in most circumstances.
Directors

A PLC must have at least 2 directors, whereas a private company can exist with a
sole director. A private company may appoint a director at a general meeting by
composite resolution.

Publication and Filing of accounts

Generally, a private company has 9 months, from the end of its accounting period, in
which to submit its accounts to its members. An exemption may be applied to small
or medium sized private companies in favour of them filing abbreviated accounts. A
PLC must submit its accounts to its members within 6 months of the end of its
accounting period by way of.

The requirement for a Company Secretary

A private company is not required to appoint a company secretary. In contrast, a

public company must have an appointed secretary, and that person must have the
relevant knowledge and experience to discharge the functions of secretary to the
PLC.

Requirement of an Annual General Meeting (AGM)

An AGM is a requirement for a public company only, and must be held within 6
months of its financial year end.

Self purchasing of shares

Subject to compliance with the statutory requirements, a private company may
 Appendix A

purchase its own shares out of its distributable profits. This requires a declaration of
solvency and an auditors report.

Disclosure of interests

Anyone entitled to an interest in shares of a private company need not disclose them
to the company, nor is the company required to keep a record of such interests. In
contrast, a PLC must keep such a register.

Minimum Share Capital of a PLC

The nominal value for the share capital of a PLC must be above the authorised
minimum of 50,000.

Registration of a PLC

A PLC may not do business or exercise its borrowing power unless it has been
issued with a Registrar's certificate under the Companies Act 2006. Before a
certificate can be issued the registrar must be satisfied that the value of the
company's allotted share capital is not below the minimum value, as set out above.
In addition, the PLC in question must issue a statutory declaration complying with the
2006 Act. As such, no PLC can operate as a business until it has shareholder funds
whose value equals at least one quarter of the authorised minimum.

Acquisition of non cash assets

The transfer of non-cash assets to or from a subscriber to a PLC's Memorandum of

Association may not occur if the consideration given is worth more than 10% of the
companies nominal share capital. The exception to this is where:
1. Consideration received or given by the PLC is independently valued and
reported to the company within 6 months of the agreement;
2. The agreement is approved by the company by way of ordinary resolution;
and
3. Copies of the resolution and report are given to members of the company at
the same time as notice of the meeting at which the resolution is proposed.

Pre-emptive rights

Unlike a private company, a PLC cannot ignore pre-emptive rights in accordance

with the Companies Act 2006, generally speaking this means that additional share
capital or equity securities must be offered to existing shareholders before becoming
available on the open market.

Duty of directors of PLC's on serious loss of capital

If the net assets of a PLC are reduced by half of its 'called-up share capital' the
 Appendix A

directors must call an extraodinary general meeting, within not more than 28 days.
The meeting must be held not more than 56 days from that date.

Restrictions on loans
where a group of companies includes a public company, both loans to directors and
quasi loans (as defined in the Companies Act 2006) to directors are prohibited.