10th January 2024
Company re-registration is the process of changing a company’s status from one type to another, for example from a private (LTD) to a public (PLC) company or one.
Re-registration is not a decision which should be taken lightly and strict rules must be followed to lawfully and successfully carry out such a procedure. Below, we detail the process of changing from a private company to a public one.
What is a Public Limited Company?
A Public Limited Company (PLC) means that the company has the legal right to offer shares to the public under the Companies Act of 2006. When a company floats its shares in the UK, it must re-register as a public company. Once legally re-registered, the company would be eligible to list on a stock exchange to enable the sale of shares.
A private company may choose to go public to access more capital through an initial public offering (IPO). The most significant benefits of an IPO include being able to fund expansion, pay off debts, or invest in new projects more efficiently than private funding routes.
Re-registration from an LTD to a PLC
A company needs to have a number of things in place to prepare for re-registration:
- A minimum of £50,000 authorised and allotted share capital.
- A minimum of 25% of the nominal value of those shares must have been paid up.
- Any share premiums must have been paid.
- A minimum of at least two directors and one company secretary.
- Special resolution where 75% of shareholders vote to go public.
- A balance sheet which has been prepared at a date of no more than seven months before application of the re-registration.
- The balance sheet must have either an unqualified or qualified auditor’s opinion, including an opinion that the qualification is not material for determining the net assets of the company. In other words, any concerns that an auditor may have about the company’s financial statements are not significant enough to impact the decision of registering as a PLC.
- A written opinion from the auditors that, at the balance sheet date, the company’s net assets are greater than the aggregate of called up share capital and undistributable reserves.
- Between the date of the balance sheet and the application for re-registration taking place, there must be no change in the company’s financial position that results in the amount of its net assets becoming less than the aggregate of it’s called-up share capital and undistributable reserves.
- Issue new articles of association.
- The application form ready to be submitted to Companies House.
Re-registration is not effective until Companies House issues a certificate of incorporation on re-registration. This certificate replaces the original certificate of incorporation and confirms the new status of the company.
Re-registration is a complex and significant process that requires careful planning and professional advice. If you are considering re-registering your company as it relates to the IPO process, please get in touch with Laura Mott, Partner and Co-Head of Transaction Advisory Services, or for further information on company secretarial services, contact Katie Holden, Company Secretarial Senior Manager.