A public limited company ('PLC') is a company that is able to offer its shares to the public.

They don't have to offer those shares to the public, but they can.

What is share capital

Share capital is the money invested in a company by the shareholders. Share capital
is a long-term source of finance.
In return for their investment, shareholders gain a share of the ownership of the
company.
An illustration of an example company share ownership structure is shown below:
Shareholders benefit from the protection offered by limited liability they are only
liable for the amount they invest in share capital rather than the overall debts of the
company.
The founding entrepreneur (/s) is highly likely to invest in the share capital of the
start-up. This is a common method of financing a start-up. Ideally the founder will
try to provide all the share capital of the company, retaining 100% control over the
business.
A key point to note is that the entrepreneur may use a variety of personal sources
(e.g. cash, personal investments) to finance the purchase of shares.
Once the investment has been made, it is the company that owns the money
provided.
The shareholder obtains a return on this investment through dividends (payments
out of profits) and/or increases in the value of the company when it is eventually
sold.
A start-up company can also raise finance by selling shares to external investors
this is typically to a business angel or venture capitalist (sometimes also called a
private equity investor).

Share capital is the money invested in a company by the shareholders. Share capital is a
long-term source of finance. In return for their investment, shareholders gain a share of the
ownership of the company.

Share capital refers to the funds that a company raises in exchange for issuing an
ownership interest in the company in the form of shares. There are two general types
of share capital, which are common stock and preferred stock.

What is 'Share Capital'

Share capital consists of all funds raised by a company in exchange for shares of either
common or preferred shares of stock. The amount of share capital or equity financing a
company has can change over time. A company that wishes to raise more equity can
obtain authorization to issue and sell additional shares, thereby increasing its share
capital.

What are 'Ordinary Shares'

Ordinary shares, a synonym of common shares, represent the basic voting shares of a
corporation. Holders of ordinary shares are typically entitled to one vote per share, and
do not have any predetermined dividend amounts. An ordinary share
represents equity ownership in a company proportionally with all other
ordinary shareholders, according to their percentage ownership in the company. All other
shares of a company's stock are, by definition, preferred shares.

BREAKING DOWN 'Ordinary Shares'

All corporations must have ordinary shares as part of their stock, as defined in their
articles of association, and at least one ordinary share must be issued to a shareholder.
In other words, someone has to be the owner of the corporation.

Preference shares, also known as preferred shares, have the advantage of a higher
priority claim to the assets of a corporation in case of insolvency and receive a fixed
dividend distribution. Ordinary shares, also known as common shares, have a lower
priority for company assets and only receive dividends at the discretion of the
corporations management. Preference shares often do not have voting rights and can
be converted into common shares. Ordinary shares are generally entitled to one vote per
share. One way to think of preference shares is as a hybrid of a bond and a security. For
this reason, preference shares are often used by venture capitalists for startup
companies.
Dividends for preference shares are set at a specific rate. However, owning preference
shares does not guarantee dividend payment. Preference shares can be cumulative or
noncumulative. For cumulative shares, if a corporation fails to pay a dividend, that
dividend amount is owed at some point in the future. The shares accumulate outstanding
dividends.

For noncumulative shares, a dividend is lost if it is not paid. The dividends are paid to
preference share owners prior to common owners receiving dividends. Dividends from
preference shares may be given favorable tax treatment.
Another type of preference shares is participatory shares. These shares include not only
a guaranteed dividend payment but also payment of an additional dividend amount if the
corporation meets certain performance goals.
In the case of bankruptcy or liquidation, preference shares are paid according to their par
value only after payments are made to outstanding bond holders. Preference shares
receive payment prior to common shares receiving anything. Still, there is risk in being
behind creditors. Due to this risk, investors may want to focus on preference shares in
companies with strong credit ratings where there is a lower likelihood of default.

Read more: What is the difference between preference and ordinary shares? |
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Debentures
Debentures are a long-term source of finance. A debenture is a form of bond or
long-term loan which is issued by the company. The debenture typically carries a
fixed rate of interest over the course of the loan.
Debentures exist as an alternative form of investing in a company that is more
secure than investing in shares because interest payments must be made by the
company.They can also include a security that will guarantee the investment even
if it defaults and there are two different ways for the debenture to be secured.
However, debenture holders have no share in the company itself.
If a company borrows money, it will give its creditor a document to evidence the
existence and terms of the loan. This document is called a debenture. Under the
debenture, the capital sum borrowed is repayable at a future date.
During the period of the loan, the company has to pay interest to the creditor. In
order to improve their chances of recovering the debt from the company in the event
of its collapse, a creditor may take a charge over some or all of the assets of the
company. This increases the creditor's chance of being repaid on the insolvency of
the company.

Accordingly, although there is no requirement that a debenture must be secured by a

charge over some or all of the company's assets, most debentures will include some
form of security for practical reasons.
dvantages
1. Helpful in raising long term capital for a company
2. There is no need to mortgage property on these shares.
3. Redeemable preference shares have the added advantages of repayment of capital whenever there
is surplus in the company.
4. Rate of return is guaranteed.
Disadvantages
1. Permanent burden on the company to pay a fixed rate of dividend before paying anything on the
other shares.
2. Not advantageous to investors from the point of view of control and management as preferences
shares do not carry voting rights.
3. Compared to other fixed interest bearing securities such as debentures, usually the cost of raising
the preference share capital is higher.