Setting up a Public Limited Company (PLC) is ideal for businesses seeking to raise capital, expand operations, and enhance credibility. In this guide, you’ll learn how to set up a public limited company, meet compliance requirements, overcome challenges, and discover why the UAE is a prime location for PLCs.
With expert assistance from Alex Zone, setting up a Public Limited Company becomes a smooth and straightforward process. Let’s now explore each step of the formation journey in detail.
Who Should Consider Setting Up a Public Limited Company?
Setting up a public limited company (PLC) is a strategic decision that suits specific types of businesses aiming for significant growth, increased credibility, and access to public capital.
Here are the key groups that would benefit most from setting up a public limited company:
1. Businesses Seeking Substantial Public Capital:
Formation of a public limited company enables companies to raise large amounts of capital by offering shares to the public, which is ideal for businesses looking to:
- Attract a broad range of investors.
- Fund major projects or expansion plans.
- Strengthen their financial position.
2. Established Private Companies Planning Expansion:
Private companies with a proven track record and ambitions for large-scale growth should consider converting to a PLC to:
- Access broader investment opportunities.
- Prepare for public listing.
- Expand into new markets more effectively.
3. Capital-Intensive Industries:
Companies in sectors such as infrastructure, technology, or manufacturing often have high capital requirements. A PLC structure supports these businesses by:
- Facilitating large-scale funding.
- Enhancing their ability to finance innovation and expansion.
4. Firms Preparing for Stock Exchange Listing:
Businesses that plan to go public will need to operate as a PLC. This transition helps to:
- Meet regulatory requirements.
- Build investor confidence.
- Increase market visibility.
5. Companies Seeking Improved Transparency and Governance:
Operating as a PLC involves regulated financial reporting and higher standards of governance, which can:
Attract institutional investors.
Enhance public trust.
Improve operational discipline.
6. Enterprises Focused on Long-Term Growth:
Businesses aiming for sustained, long-term development through external funding and public ownership will find the PLC structure ideal due to:
- Greater access to capital markets.
- Increased credibility with stakeholders.
- Enhanced potential for strategic partnerships.
Read Also: Advantages and Disadvantages of a Public Limited Company
How to Set Up a Public Limited Company?
Setting up a Public Limited Company involves many legal and administrative steps. Here is a step-by-step guide to help you understand how to set up a Public Limited Company:
1. Business Structure:
In the UAE, a PLC is referred to as a Public Joint Stock Company (PJSC).
- Can offer shares to the public and list on a stock exchange (e.g., ADX or DFM).
- Requires at least 10 founders (individuals or legal entities).
2. Choose a Company Name:
- Must be unique and not identical to any registered company.
- Should end with “Public Limited Company” or “PLC”.
3. Minimum Capital Requirement:
- Must have a minimum share capital of AED 30 million.
- At incorporation, at least 25% of the company’s issued capital must be fully paid and documented.
- The remaining can be offered to the public after regulatory approval.
4. Legal Requirements:
- Board of Directors: Must have 3 to 11 members.
- At least 51% of the company must be owned by UAE nationals, unless operating under a Free Zone that allows 100% foreign ownership.
- Must appoint a licensed auditor and comply with Emirates Securities and Commodities Authority (ESCA) regulations.
5. Documentation Needed:
To register a PJSC in the UAE, you will need:
- Trade name reservation.
- Feasibility study/business plan.
- Memorandum and Articles of Association (MOA & AOA).
- Founders’ Agreement and List of Shareholders.
- Bank certificate confirming deposit of initial capital.
- Approvals from DED, SCA and the Ministry of Economy.
- Legal translations of all documents (Arabic/English).
6. Approval Process:
- Obtain initial approval from the DED.
- Submit an application to SCA for share issuance and public subscription.
- Publish a prospectus to invite public investment.
- The final incorporation certificate is issued after the public share offering is completed and documented.
7. Stock Market Listing (Optional but Common):
Once your PJSC is incorporated, you can apply for a listing on:
- Abu Dhabi Securities Exchange (ADX)
- Dubai Financial Market (DFM)
- Subject to meeting strict transparency, capital, and reporting criteria.
Whether you’re exploring business setup in mainland UAE or planning a business setup in UAE Freezone, our expert team is here to simplify your journey.
Requirements for a Public Limited Company Formation in the UAE
To ensure compliance with UAE company law when forming a Public Limited Company (PLC), the following essential requirements must be met:
1. Board Composition
Elect at least three board members, as long as the total number of shareholders does not exceed eleven.
2. Minimum Share Capital
A minimum capital of AED 5,000,000 (five million dirhams) is required for the company to qualify as a public joint stock company.
3. Share Nominal Value
Regulatory standards require that the face value of each share fall within the range of AED 1 to AED 100.
4. Company Definition and Feasibility
Clearly define the company’s objectives and economic feasibility, ensuring alignment with regulatory requirements and investor transparency.
By following these structured steps, you will fully understand how to form a public limited company and meet all requirements for setting up a public limited company.
Regulatory and Compliance Requirements in the UAE
Regulatory and compliance requirements for setting up a public limited company in the UAE are presented in the following points:
1. Final Approval from the DED:
- Obtain final consent from the Department of Economic Development (DED) in the emirate where your company’s headquarters will be located.
- This step confirms the legitimacy of your business structure and proposed activity.
2. Document Submission:
Submit your PJSC registration application along with all required documentation, which will vary depending on your specific business activity.
Documents typically include:
- Feasibility study
- Memorandum and Articles of Association (MOA & AOA)
- Founders’ agreement
- Capital deposit confirmation
- Board resolutions and legal forms
3. Application Review Period:
Authorities will review your application within 10 working days.
You will receive either:
- A formal approval, or
- A rejection notice with detailed reasons and instructions for correction and resubmission.
4. Post-Approval Formalities:
Upon approval, finalize any remaining documentation, such as:
- Court certification
- Notarization of legal documents
- Appointment of an external auditor
This ensures your company meets all governance and compliance standards.
5. Business License Issuance:
- Once all regulatory steps are completed, you’ll receive your commercial license.
- This allows you to officially begin operations as a public limited company in the UAE.
Common Challenges and How to Overcome Them
Setting up a public limited company comes with some challenges. Here are the most common challenges and a way to overcome them:
1. High Initial Setup Costs:
The legal, administrative, and capital requirements involved in setting up a public limited company can lead to significant initial expenses. To manage this, develop a comprehensive financial plan early on. This helps allocate resources efficiently and ensures you’re prepared for all necessary investments.
2. Regulatory Complexity:
The legal paperwork and compliance requirements can be overwhelming. Partnering with a professional consultancy like Alex Zone simplifies the entire formation of a public limited company.
3. Loss of Control:
With public ownership, decision-making is often influenced by shareholders and the board of directors. To address this, establish a strong shareholder agreement from the beginning.
4. Risk of Public Scrutiny:
Operating as a PLC means increased visibility and accountability. Be prepared to manage investor expectations, media attention, and public feedback by maintaining transparent communication and strong corporate governance from day one.
Why Setting Up a Public Limited Company in the UAE?
The UAE has emerged as a global business hub offering a strategic location, tax-friendly policies, and modern infrastructure. Here’s why you should consider setting up a public limited company in the UAE:
1. Zero % Corporate & Income Tax in Free Zones:
Businesses operating in UAE free zones enjoy zero corporate and personal income tax. This allows companies to maximize retained earnings and reinvest profits directly into growth and expansion.
2. 100% Foreign Ownership:
Unlike many jurisdictions that require local partners, UAE allows full foreign ownership of PLCs in specific free zones.
3. Access to International Markets:
The UAE’s connectivity makes it a prime base for multinational operations and stock listings on regional exchanges.
4. Business-Friendly Regulatory Environment:
The UAE government actively promotes entrepreneurship and foreign direct investment. The regulatory environment is streamlined, with clear procedures for forming all types of entities, from LLCs to PLCs, ensuring a smooth business setup in Dubai UAE.
How Alex Zone Supports You in Setting up a Public Limited Company?
Setting up a Public Limited Company begins with understanding the formation process, but true success lies in executing it effectively. With expert guidance from Alex Zone, establishing your Public Limited Company becomes seamless, strategic, and fully compliant. Here’s how we could help you:
1. End-to-End Consultation:
From name reservation to final registration, we handle all administrative tasks.
2. Legal and Regulatory Compliance:
Our experts ensure that every document meets international standards for setting up a public limited company in your chosen jurisdiction, providing support for essential legal formalities, including certificate attestation services in Dubai.
3. Banking and Licensing Assistance:
We guide you through opening a corporate bank account and obtaining mandatory operational licenses.
4. Strategic Business Advisory:
Beyond just forming your PLC, we help you position it for long-term growth through investor networking, risk management, and corporate governance support.
Whether you’re exploring how to start a public limited company or expanding your existing one globally, Alex Zone is your trusted partner in success.
Conclusion
Deciding to set up a public limited company is a significant step that boosts funding opportunities, credibility, and growth. Understanding legal requirements and choosing the right jurisdiction, such as the UAE, ensures success. With expert support, the process becomes smooth, helping transform your business into a market leader.
Common Frequently Asked Questions
1.How to Set Up a Public Limited Company?
To set up a public limited company, you need at least two directors, one qualified company secretary (e.g., a chartered secretary or accountant), and one shareholder, requiring a minimum of two people to establish it.
2. Who Controls a Public Limited Company?
When you set up a public limited company, control rests with its shareholders. Ownership is distributed based on the number of shares held by each investor.
3. Can You Buy a Public Limited Company?
Yes, you can buy a public limited company. Since it’s listed on the stock exchange, ownership is transferred through share purchases by investors.
For a free consultation, contact us now and let us help you choose the best for your project.
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