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What is a listed public company & quoted public company?

 
Incorporate a Public Listed Company

What is a listed public company & quoted public company? There are several specific definitions of a listed company in company law incorporation legislation, some of which are explored in more depth elsewhere in this article. However, broadly, a listed company is a public company any of the shares in which are officially listed and trade on a stock market.

The stock market which is the focus of this article is the London Stock Exchange's main Market which is the largest market in the UK. In the UK there are two smaller competitor stock markets to the Main Market, Plus Markets, and NYSE Euronext London. Companies may also be listed on the stock markets based overseas, such as the Deutsche Borse in Germany, NASDAQ and the New York Stock Exchange in the USA, NYSE Euronext in Amsterdam, Brussels, Lisbon and Paris, or NASDAQ QMX Nordic Exchange covering Scandinavia and Baltic countries.

Obviously, when working with specific legislation, care must be taken to analyse the specific definition of 'listed'. For example, under some legislation a company which has its shares quoted on AIM rather than the Main Market will be a listed company, while under other legislation the same company will fall outside the definition of a listed company.

The words 'quoted' and 'listed' are usually used interchangeably, both by the layperson and by the practitioner.

However, again, care should be taken to use the appropriate terminology in relation to specific markets; the London Stock Exchange, for example, defines shares listed on the Main Market as listed (but not quoted) and shares listed on AIM as quoted, but unlisted. Furthermore, the CA 2006 definition of 'quoted company' in s. 385 refers to companies listed on 'regulated markets' including the Main Market, but not AIM.

This can course lead to confusion. The key is not take for granted the meaning of the terms 'listed' and 'quoted', but to example (if interpreting such terms) or explain (if using such terms) the context in which they are used, taking account of the different definitions.

The distinction between 'Public' and 'Listed' companies: just because a company is a public company, it does not automatically follow that it is a listed company. There is some correlation between public companies and listed companies; in that a company must be a public company to become a listed company (private company cannot become listed companies). However, we already know that only about 10% of public companies are listed.

The distinction between the terms is important, because a company's status will determine how that company is regulated. Public companies are more heavily regulated than private companies; listed companies are significantly more heavily regulated than unlisted public companies.

Ability to offer shares to the public: it is prohibited for the UK private company to offer its shares to the public under s.755 of the CA 2006. The main reason for registering or re-registering as a public company, therefore, is to enable a company to offer for registering as a public company, therefore, is to enable a company offer its shares to the public.

The ability to offer shares to the public is an advantage, as it provides a company with a new source of finance (the consideration received for the shares) and opens up new opportunities for raising finance which otherwise may be unavailable to the company.

If a s.755 of the CA 2006 breached, the Court has the power to re-register the offending private company as a public company under s.758 of the CA 2006. If, though, the company does not meet the requirements to become a public company then the Court either may order that the company is wound up, or it may a remedial order under s.759 of the CA 2006.

The remedial order seeks to put a person affected by a breach of s.755 back in the position he was in before the breach. The Court has wide-ranging powers to achieve this. The application to Court for a s.758 or s.759 order can be made by a shareholder or creditor of the offending company, or by the Secretary of State for Business Innovation and Skills (BIS).

A secondary reason for a company to be registered or re-registered as a public company is to benefit from the prestige conferred by the letters 'PLC' ('public limited company'). Some companies therefor opt for public company status even if they have no immediate plans to offer shares to the public. Subsidiaries of public companies are often public companies too, for the same reason.