What Is A Private Company? Is It The Same Thing As A Proprietary Limited Company?
A private company, otherwise known as a proprietary company, is the most common type of company in Australia, especially for small and medium sized business. As the name suggests, a private company is owned privately, as opposed to being owned by the public on a stock exchange or by the government.
You can quickly recognise private companies as they have ‘Pty’ as part of their name. For example, ‘Sprintlaw Pty Ltd’.
In Australia, private companies are all limited by shares. This makes private companies an attractive option for shareholders and members, because liability of the company is limited to any unpaid shares.
Private companies are classed as either a large or small private company, and have different reporting obligations to ASIC depending on their size. For example, small private companies generally don’t have to prepare an annual financial or a director’s report.
For financial years from 1 July 2019, to be categorised as a large private company, at least two of the following need to be satisfied:
- consolidated revenue is $50 million or more
- consolidated gross assets are $25 million or more
- the company (and any entity it controls) has 100 or more employees
These thresholds were previously half of what it is for financial years before 30 June 2019.
Private companies have certain limitations compared to a public company, such as the limit of 50 shareholders. There must be a minimum of one director, but a company secretary is optional. There must also be a registered office, though it does not have to be accessible to the public.
Previously, equity crowdfunding options were only available to public companies, but due to changes made to the law in 2018, private companies are now also able to access this option.
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