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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.