Public vs Private Companies in Australia: Choosing the Right Structure

Choosing the right company structure in Australia is a big decision. It shapes how you raise funds, how much control you keep, and the level of reporting and governance you’ll manage day to day.

If you’re weighing up a public company versus a private (proprietary limited) company, this guide breaks down the practical differences, what each structure means for your growth plans, and the legal obligations to consider before you decide.

Whether you’re building your first startup, scaling an established business, or mapping a future listing, understanding these options will help you set up with confidence.

What’s the Real Difference Between Public and Private Companies?

Under Australian law, “public company” and “proprietary (private) company” are two distinct structures with different rules for ownership, fundraising and regulation.

Private Companies (Proprietary Limited – Pty Ltd)

• Shareholders: Up to 50 non‑employee shareholders. Ownership is typically founders, early employees and private investors.
• Share offers: Shares can’t be offered to the public. Fundraising relies on private offers and exemptions under the Corporations Act.
• Regulation & reporting: Lighter touch than public companies. Small proprietary companies generally don’t have to lodge audited financial reports unless directed by ASIC or shareholders; large proprietary companies must lodge audited financial statements annually.
• Control & privacy: More control over who comes onto the cap table and less public disclosure about the business.
• Liability: Shareholders have limited liability. The company is a separate legal entity.

Public Companies (Limited – Ltd)

• Shareholders: No upper limit on shareholders. Shares may be offered to the public.
• Share offers and listings: Can make public offers (e.g. via a prospectus) and may list on an exchange such as the ASX. Unlisted public companies can also raise from the public if they meet offer document requirements.
• Regulation & reporting: Higher baseline obligations (e.g. audited annual financial reports, AGMs). If listed or otherwise a “disclosing entity”, continuous disclosure obligations apply.
• Liability: Limited liability for shareholders, with more stringent director and governance obligations.

You can tailor internal governance with a Company Constitution (rather than using replaceable rules) in either structure.

Public vs Private: Which Structure Fits Your Goals?

Your choice should reflect your funding plan, appetite for public disclosure, governance capability and long‑term strategy.

Funding and Growth

• Private (Pty Ltd): Best suited to funding from founders, angels, VC and private equity. Proprietary companies are restricted from public fundraising and usually rely on private placement exemptions such as section 708 (e.g. small-scale offerings, sophisticated/professional investors).
• Public (Ltd): Enables public offers (with a prospectus) and potential ASX listing for broader access to capital. With that access comes significantly more oversight and cost.

Control and Transparency

• Private: Typically offers tighter control for founders over who becomes a shareholder and how decisions are made, with less public visibility.
• Public: Designed for wider ownership and transparency. More disclosure, formal governance and shareholder engagement (e.g. AGMs) are part of the model.

Compliance Load

• Private: Compliance is meaningful but manageable for most startups and SMEs. Large proprietary companies still have significant reporting obligations.
• Public: Expect annual (and in some cases half‑yearly) reporting, audits, AGM requirements and, if listed or otherwise a disclosing entity, continuous disclosure.

Common Pathway

Most Australian businesses start as a private Pty Ltd and consider moving to a public company when the scale and funding strategy require it. If this is on your roadmap, put strong foundations in place early-clear founder arrangements, a robust Shareholders Agreement and clean cap table practices will make transitioning smoother.

Step‑By‑Step: Setting Up Your Company in Australia

The high‑level process is similar for private and public companies, with stricter director and officer requirements for public companies.

1) Plan Your Structure and Governance

Map out your capital needs, investor profile, board and governance approach. If you’re aiming for institutional or public capital, plan for stricter reporting and audit readiness from day one.

2) Choose Your Officers and Meet Residency Requirements

• Private company: Minimum one director ordinarily resident in Australia.
• Public company: Minimum three directors (at least two ordinarily resident in Australia) and at least one company secretary who is ordinarily resident in Australia.

Director residency is a legal requirement-this quick guide to resident director requirements outlines what to check before you register.

3) Select a Name and Governance Rules

Confirm name availability and whether you’ll use replaceable rules or adopt a tailored Company Constitution. Most growth companies prefer a constitution so decision‑making rules, share classes and transfer mechanics are clear.

4) Register the Company

Register your company with ASIC and obtain an ACN. You’ll complete details about directors, shareholders, share structure and your registered office. After incorporation, you’ll receive ASIC documentation (for example, an ASIC Certificate of Registration).

5) Get Your ABN and Set Up Tax

Apply for an ABN and assess GST registration. Many businesses must register for GST when current or projected turnover reaches the relevant threshold (commonly $75,000, noting thresholds and tax settings can change). This is general information only-speak to your accountant or a registered tax adviser for tax advice.

6) Put Your Core Agreements in Place

Before trading, settle founder terms, investor rights, and customer and employment documentation. In practice this includes your Shareholders Agreement (if you have multiple shareholders), customer terms and a compliant Employment Contract for staff.

7) Prepare for Ongoing ASIC Obligations

All companies must keep ASIC records up to date, pay the annual review fee and pass a solvency resolution each year. Here’s a handy overview of the annual review and solvency resolution process.

What Laws and Ongoing Obligations Apply?

The Corporations Act 2001 (Cth) sets the framework for both public and private companies. Your exact obligations depend on your size, whether you’re public or private, and whether you’re listed or a disclosing entity.

Financial Reporting and AGMs

• Small proprietary companies: Generally not required to lodge audited financial reports unless directed by ASIC or shareholders.
• Large proprietary companies: Must prepare and lodge audited financial statements annually.
• Public companies: Must lodge audited annual financial reports and hold an AGM. Many also produce half‑year reports.

Disclosure Obligations

• Fundraising disclosure: Public offers typically require a prospectus. Proprietary companies are limited to private offers using Corporations Act exemptions (e.g. section 708 pathways).
• Continuous disclosure: Applies to listed entities under ASX Listing Rules and other “disclosing entities” under the Corporations Act. Unlisted non‑disclosing public companies don’t have continuous disclosure obligations.

Consumer Law

If you sell goods or services, you must comply with the Australian Consumer Law (ACL) on fair trading, guarantees, refunds and advertising. Many businesses benefit from tailored customer terms and processes aligned with the ACL-our consumer law team can help you set these up correctly.

Employment Law

Hiring staff brings Fair Work obligations, modern awards, superannuation and WHS duties. Set clear expectations with a compliant Employment Contract and implement basic workplace policies from day one.

Privacy and Data Protection

Privacy rules in Australia are governed by the Privacy Act 1988 (Cth) and the Australian Privacy Principles. A Privacy Policy is legally required if your business is an APP entity (for example, most businesses with $3 million+ annual turnover, and some smaller businesses in specific categories such as health service providers and credit reporting). Even if you’re not strictly required, having a clear Privacy Policy is best practice and often expected by customers, platforms and partners.

Industry Licensing and Other Rules

Depending on your sector, you may need specific licences (e.g. financial services, liquor, healthcare) and to meet additional regulatory standards. Build these checks into your setup plan so there are no surprises post‑launch.

What Legal Documents Should You Put in Place?

The right documents reduce risk, set expectations and save you from costly disputes. Here are the essentials most companies need.

• Company Constitution: Custom governance rules covering board powers, share rights and transfers, and decision‑making that suit your company’s needs. Start with a tailored Company Constitution rather than relying on replaceable rules.
• Shareholders Agreement: Sets founder and investor rights, decision thresholds, exits and dispute processes. A clear Shareholders Agreement is critical where there are multiple owners.
• Customer Terms and Conditions: Defines your services, pricing, limitations of liability and ACL‑compliant refunds. For online businesses, make sure your website terms are up to date; for B2B, consider a Customer Contract.
• Employment and Contractor Agreements: Clear Employment Contracts and contractor agreements help manage IP ownership, confidentiality, restraints and performance expectations.
• Privacy and Data Documents: Where applicable, a Privacy Policy and internal data handling processes build trust and ensure compliance with the Privacy Act.
• Board and Governance Papers: Templates for board resolutions, share issues/transfers and meeting minutes make record‑keeping easy and compliant.

You may not need everything on day one, but getting the core documents right early is one of the best investments you can make in your business.

Key Takeaways

• Private (Pty Ltd) and public (Ltd) companies operate under different fundraising, reporting and governance settings-your choice should reflect how you plan to grow.
• Most businesses start as a private company for flexibility and control, then consider converting to public if public capital or a listing becomes part of the strategy.
• Proprietary companies are restricted from public fundraising and typically use section 708 exemptions; public companies can make public offers (usually with a prospectus) and may list.
• Continuous disclosure applies mainly to listed entities and other disclosing entities; public unlisted companies still have elevated reporting and AGM duties.
• Build strong foundations with a tailored Company Constitution, a clear Shareholders Agreement, customer terms, Employment Contracts and, where applicable, a Privacy Policy.
• All companies must manage ASIC annual reviews and a yearly solvency resolution-stay organised with processes that meet ongoing obligations from the start.

If you’d like a consultation on choosing between a public vs private company structure in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.