Public vs Private Companies: Insights From Australia’s Top 50 ASX Businesses

Thinking about how Australia’s biggest companies are structured - and what that means for your own business? You’re not alone.

Understanding the difference between public and private (proprietary) companies is essential if you’re weighing up growth, funding and governance options. It’s also key to making sense of why the ASX Top 50 looks the way it does.

In this guide, we’ll break down how public and private companies work in Australia, clarify a few common misconceptions (like “public” vs “listed”), and share practical lessons you can borrow from the ASX leaders - even if you’re building a much smaller business.

What’s The Difference Between Public And Private Companies In Australia?

In Australia, both public and private companies are separate legal entities. That means the company can own property, enter contracts and be responsible for its own debts. This separation helps protect your personal assets and is a big reason many founders eventually incorporate.

Where they differ is in how they raise money, how they’re governed, and what they must disclose.

• Public company (limited by shares): Can have unlimited shareholders and may offer shares to the public. A public company can be listed on the ASX or unlisted. Listing brings additional market rules and visibility, but not all public companies are listed.
• Proprietary (private) company: Also limited by shares, but cannot make public offers of shares (with limited exceptions). It’s generally limited to a maximum of 50 non‑employee shareholders and enjoys lighter reporting obligations.

If you’re early in your research, it helps to read a straightforward comparison of a public vs private company to anchor the key pros and cons before you decide your path.

How Do Public Companies Work?

Public companies are designed for scale. They can open their shareholder base widely, tap larger pools of capital and, when listed, access the transparency and liquidity of a public exchange.

Listed vs unlisted public companies

It’s easy to conflate “public” with “listed,” but they’re not the same thing. All listed companies are public, but not every public company is listed on the ASX.

Listing adds another layer of rules (like continuous disclosure and periodic reporting) and provides a public secondary market for investors. Unlisted public companies are still subject to stricter governance and fundraising rules than proprietary companies, but they don’t have exchange obligations.

Governance and director requirements

• Board composition: A public company must have at least three directors, and at least two must ordinarily reside in Australia.
• Company secretary: A public company must have at least one company secretary who ordinarily resides in Australia.
• Accountability: Expect audited annual financial reports and greater transparency obligations. If listed, add continuous disclosure, shareholder meeting rules and ASX Listing Rules to the mix.

For a refresher on what a public company is and when it makes sense, this short Q&A is a helpful primer.

Capital raising

Public companies can raise funds from the public (usually through a prospectus or other disclosure document). If listed, they may also undertake placements, entitlement offers or structured institutional raises. This access to capital is a key reason many of the country’s largest businesses are public and, in many cases, ASX-listed.

Reporting and disclosure

Public companies file more detailed financial reports, and their audits are more visible. Listed entities also report market-sensitive information promptly. The trade-off for growth capital is sustained transparency and compliance costs.

How Do Private (Proprietary) Companies Work?

A proprietary company is the default choice for many Australian startups and SMEs. It offers limited liability and a simpler compliance footprint than a public company.

Ownership and fundraising

• Shareholder cap: Up to 50 non‑employee shareholders.
• Fundraising limits: Cannot raise capital from the public in ways that require a disclosure document (there are narrow exceptions). Funding typically comes from founders, private investors, retained earnings or bank finance.

Directors and local presence

A proprietary company needs at least one director who ordinarily resides in Australia. If you have offshore founders or plan to relocate, make sure you meet the Australian resident director requirements from day one to avoid ASIC issues.

Governance and reporting

Proprietary companies generally face lighter reporting obligations. Smaller companies may not need to lodge audited financials, while “large proprietary” companies do (based on size thresholds). You still need to keep proper financial records, comply with directors’ duties and meet any industry-specific rules.

Why many founders start here

The proprietary route keeps control tight, privacy higher and costs lower in the early years. As your business grows, you can bring on more sophisticated investors, convert to a public company or prepare for an eventual listing if that’s part of your strategy.

What Can You Learn From The ASX Top 50?

Most of the ASX Top 50 are public, listed companies with professional boards, robust governance and deep access to capital. While your business might be at a very different stage, there are practical habits you can borrow now.

1) Invest early in governance that scales

Top companies treat governance as an enabler, not a burden. Even as a private company, you can introduce clear decision-making rules, board reporting rhythms and risk registers so growth doesn’t outpace controls.

• Adopt a tailored Company Constitution that reflects how you want decisions made and shares managed.
• If you have co-founders or early investors, put a Shareholders Agreement in place to set expectations around roles, exits and conflict resolution.

2) Treat capital as a strategic tool

Large listed companies match the type of funding to their goals - equity for long-term investments, debt for working capital or acquisitions, and hybrid structures when markets shift.

As a private company, you’ll rely more on private placements and debt. Build clean cap tables, document investor rights properly, and plan your next raise well ahead of when you need it.

3) Embrace transparency and steady communication

Listed businesses communicate frequently with the market because they must. You can adapt the mindset: give investors, lenders and key stakeholders consistent updates, and share the metrics that matter. Clear communication builds trust and unlocks future funding.

4) Systematise compliance

ASX leaders operate in a fishbowl. They still meet obligations because compliance is baked into internal processes, not treated as an ad hoc task.

For SMEs, that might look like regular board (or management) meetings, proper minute-taking, annual calendars for filings, documented delegations and clear contract execution practices such as signing under section 127 to reduce enforceability risks.

5) Build a brand and protect it

The top end of the market invests in brand equity and legal protection. Whether you’ll stay private or one day list, protect your name, logo and core IP early. Strong brands attract customers, talent and capital.

Choosing A Structure: A Practical Checklist

Unsure whether a proprietary or public company is right for you? Work through these practical questions. If you’re still on the fence, it’s completely normal - many businesses start as proprietary and revisit the decision as they scale.

1) How much capital do you need - and from whom?

• Low to moderate capital needs: Proprietary companies are usually sufficient, especially if you can fund growth organically or through private investors and lenders.
• Significant or recurring capital needs: Public status (and later, listing) can open larger, repeatable funding pathways, but you must be ready for the costs and scrutiny.

2) What level of transparency are you comfortable with?

• Higher privacy: Proprietary companies have fewer public disclosures.
• Market-facing visibility: Public and listed companies carry ongoing reporting and market communication duties.

3) Where will your directors be based?

Make sure you can meet Australian residency rules for directors at all times. This is a foundational compliance requirement and one to plan for if your team is global (see the note above on resident director requirements).

4) What governance do you need today - and in two years?

Even as a proprietary company, adopt a clean, scalable governance framework. Consider a Company Constitution that matches your commercial reality, and get your cap table, delegations and board reporting into shape early.

5) Are you set up correctly from day one?

Whether you start proprietary or go straight to public, get the basics right: register the company with ASIC, set up your bank accounts, record share issuances accurately and document founder arrangements. If you need a hand, our team can manage the end-to-end Company Set Up and issue tailored documents so you’re compliant from the outset.

6) Don’t forget taxes and ongoing compliance

Companies are subject to Australian tax laws administered by the ATO, and many businesses must register for GST once they cross the turnover threshold. It’s smart to work closely with your accountant on tax settings and with a lawyer on company compliance - they go hand in hand as you grow.

Compliance Essentials (Whichever Structure You Choose)

Public and private companies share core legal obligations. Below is a quick checklist to help you stay on top of the essentials.

Directors’ duties

Directors must act in the best interests of the company, exercise care and diligence, avoid improper use of information or position, and manage conflicts. Set up regular meetings, keep minutes and ensure financial oversight is real, not just on paper.

Accurate records and filings

Maintain up-to-date company registers (members, options and charges where relevant), document share issuances and transfers properly, and meet ASIC lodgement deadlines. If you change directors, share structure or addresses, update ASIC promptly to avoid penalties.

Fundraising rules

• Proprietary: Generally cannot publicly offer shares. Private raises must fit within Corporations Act exemptions - get advice before any offer document goes out.
• Public: Can raise from the public via disclosure (e.g., a prospectus). If you are unlisted, understand the disclosure reliefs and limits that may apply; if listed, follow ASX Listing Rules as well.

Constitution, shareholder arrangements and execution

• Constitution: Adopt a Company Constitution that suits your operational and fundraising plans.
• Shareholder arrangements: If you have multiple owners, a Shareholders Agreement will help you manage decision-making, vesting, dispute resolution and exits.
• Signing and authority: Use clear delegations and reliable execution methods such as signing under section 127 for contracts to reduce enforceability and authority disputes.

Reporting and audits

Public companies (and “large proprietary” companies) must lodge financial reports and, in many cases, audited accounts. Small proprietary companies may have lighter requirements but should still keep clean books and be audit-ready if investors or lenders request it.

Board, risk and internal controls

Create an annual governance calendar. Schedule board meetings, budget reviews, risk workshops, and compliance checks. Document key risks and assign controls and owners. The more routine you make governance, the easier it is to scale.

When to consider becoming a public company

There’s no single trigger, but common reasons include significant capital needs, broader employee equity participation, strategic acquisitions or a path toward listing. If you think conversion might be on your roadmap, talk to advisors early so you can tidy up your structure, cap table and governance well ahead of any change.

Key Takeaways

• “Public” and “listed” aren’t the same - a company can be public without being ASX-listed; listing simply adds another layer of rules and market visibility.
• Public companies access larger capital pools and accept heavier governance and disclosure; proprietary companies keep ownership tight with lighter reporting and fundraising limits.
• Director residency rules are different: public companies need at least three directors (two resident in Australia); proprietary companies need at least one Australian-resident director.
• Borrow big-business habits early: adopt a tailored constitution, keep clean records, plan capital strategically and build a steady cadence of governance and reporting.
• If you have multiple owners or investors, put a Shareholders Agreement in place and use reliable execution practices (like section 127) to reduce risk.
• Tax and corporate compliance go together - set up your company correctly, stay on top of ASIC and ATO obligations, and get advice before any fundraising activity.

If you’d like a consultation on choosing between a public and proprietary company - or getting your company set up the right way - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.