In Australia, there are two main categories of companies – private (proprietary) (Pty Ltd) companies and public (Ltd) companies with private companies being the most common. The key difference between proprietary companies and public companies is that public companies are open to investment by the public where proprietary companies are not. This makes it easier for public companies to raise capital however it attracts a higher level of regulation and compliance protecting investors and the general public.
While both public and proprietary companies are regulated by ASIC, the level of disclosure a company has to make to ASIC varies depending on their company type. Most small to medium proprietary companies will not be required to lodge financial reports with ASIC but all public companies (unless otherwise exempt) must disclose financial statements, directors’ reports and audited accounts on an annual basis. They must also hold an Annual General Meeting.
There are differing requirements surrounding Officeholders in each company type – proprietary companies must have at least one Director but appointment of a Secretary is not mandatory. Public companies on the other hand must have at least three Directors and one Secretary appointed at all times.
Most small and medium businesses will choose to register as a proprietary company limited by shares however they are restricted to a maximum of 50 shareholders so sometimes a small unlisted public company is a better fit.