What is the Difference Between a Public and Private Company?

The public vs private company difference in Australia comes down to who can own the company and who it can ask for money. A private company (formally a proprietary company, or Pty Ltd) is capped at 50 non-employee shareholders and can’t offer shares to the general public. A public company (Ltd) has no shareholder cap and can raise money from the public, in exchange for stricter rules on directors, meetings and reporting.

Most founders only think about this when an investor asks a question they can’t answer. That’s fine. The choice you make at registration still shapes who you can bring in, what you’ll report, and how much admin lands on your desk every year. Getting it right now is a lot cheaper than fixing it mid-raise.

• Public vs private company: the side-by-side view
• What is a proprietary (private) company in Australia?
• What is a public company in Australia?
• What are the director and secretary requirements?
• What are the reporting obligations for public and private companies?
• What we see in Lawpath briefs
• Public vs private company: which should you choose?
• Can you convert a proprietary company into a public company?
• Public vs private company checklist
• FAQs

Public vs private company: the side-by-side view

Here’s the whole comparison in one place. Both structures are set up under the Corporations Act 2001 (Cth), and both give shareholders limited liability. Everything else is where they split.

Feature	Proprietary (private) company	Public company
Name ending	Pty Ltd	Ltd (some companies limited by guarantee can drop it)
Shareholder limit	50 non-employee shareholders (crowd-sourced funding shareholders don’t count)	No cap
Minimum shareholders	1	1
Public share offers	Not allowed, except crowd-sourced funding and disclosure exemptions	Allowed, usually with a prospectus or other disclosure document
Minimum directors	1, living in Australia	3, with at least 2 living in Australia
Company secretary	Optional	At least 1, living in Australia
Annual general meeting	Not required	Required
Audited financial reports	Only if large, foreign-controlled or crowd-funded above set limits	Required (with tiered relief for companies limited by guarantee)
Listing on the ASX	Not possible	Optional
Who uses it	Small businesses, family companies, startups, corporate trustees	Companies raising from the public, listed companies, charities, clubs, associations

If you only read one row, read the shareholder limit. It’s the rule that forces most growing companies to think about this decision at all.

What is a proprietary (private) company in Australia?

A proprietary company is a privately held company registered with ASIC that has no more than 50 non-employee shareholders and doesn’t raise money from the public. It’s what Australians mean when they say “private company”, and it’s by far the most common company type in the country.

You get a separate legal entity with limited liability and very light governance. One director, one shareholder (they can be the same person) and an optional secretary is a perfectly legal setup. That’s why sole founders, family businesses and corporate trustees almost always end up here.

What does Pty Ltd mean?

“Pty Ltd” stands for Proprietary Limited. “Proprietary” tells the world the company is privately held and subject to the shareholder and fundraising limits. “Limited” means each shareholder’s liability stops at the unpaid amount on their shares.

Limited liability protects shareholders, not directors acting badly. Directors still owe duties of care and good faith, and can be personally liable for insolvent trading. Plenty of founders assume the Pty Ltd shields them from everything. It doesn’t.

How many shareholders can a proprietary company have?

A proprietary company can have up to 50 non-employee shareholders. Employees of the company (or a subsidiary) don’t count. Neither do former employees who got their shares while they were on staff, so an early hire who leaves with equity won’t push you closer to the cap.

Here’s the trap. Advisors, contractors and consultants who take equity aren’t employees. Every one of them counts. A startup handing out small advisory stakes across a few funding rounds can burn through the cap faster than expected, often without anyone tracking the number.

Joint holders count as one shareholder. Crowd-sourced funding shareholders don’t count at all (more on that below).

Can a private company sell shares to the public?

No, a proprietary company can’t make a general public offer of shares. It can still raise real money privately. The main routes are:

• Personal offers to no more than 20 investors, raising no more than $2 million, in any 12-month period (the small-scale offer exemption)
• Offers to sophisticated and professional investors, such as investors putting in $500,000 or more or holding an accountant’s certificate
• Offers to senior managers and their close relatives
• Crowd-sourced funding (CSF) through a licensed intermediary platform

CSF is the exception most guides skip. Since October 2018, eligible proprietary companies can raise from everyday investors through a licensed CSF platform without converting to a public company. CSF shareholders sit outside the 50-shareholder cap. The catch: you need at least 2 directors, extra register-keeping, and audited accounts once your CSF raising passes $1 million.

Whatever route you take, document it properly. A clean share issue process (board resolution, updated register, ASIC notification) is what lets the next investor’s lawyers sign off quickly.

What is a public company in Australia?

A public company is any Australian company that isn’t registered as proprietary. It can have unlimited shareholders, offer shares to the public, and list on a stock exchange if it chooses. In return, it takes on more directors, a mandatory secretary, annual general meetings and audited reporting.

People hear “public” and think “government-owned” or “on the stock market”. Neither is right. The word describes a legal company type, not who owns it or where its shares trade.

Does a public company have to be listed on the ASX?

No. A public company can be listed or unlisted. Listed companies take on the exchange’s Listing Rules on top of the Corporations Act, including continuous disclosure. Unlisted public companies skip the Listing Rules but keep every other public company obligation.

One point catches growing companies out. Once an unlisted company has more than 50 members, the takeover rules in Chapter 6 of the Act start to apply, so anyone wanting to cross 20% ownership needs to follow a formal takeover process. That’s a control question worth raising before your cap table gets wide.

Which kind of public company would you actually be?

Most public companies fall into one of two camps, and the choice depends on whether you have owners or members.

• Public company limited by shares. Shareholders own the company and can receive dividends. This suits businesses raising capital from a wide investor base or preparing for an IPO.
• Public company limited by guarantee. There are no shares. Members guarantee a fixed amount (often $10 or less) if the company is wound up, and profits stay in the organisation. Charities, sporting bodies, schools and industry associations use this structure.

If you’re setting up a not-for-profit, the guarantee company is usually the right call. You don’t pick it because you want investors. You pick it because you have members and need a stable, recognised structure.

What are the director and secretary requirements?

The officeholder rules are the sharpest practical difference between proprietary and public companies. ASIC’s officeholder rules set these minimums:

Role	Proprietary company	Proprietary company with CSF shareholders	Public company
Directors	At least 1, living in Australia	At least 2, a majority living in Australia	At least 3, at least 2 living in Australia
Secretary	Optional (if appointed, 1 must live in Australia)	Optional	At least 1, living in Australia

Every director in either company type needs a director ID before they’re appointed. Every officeholder also has to give written consent before taking the role. Skipping the consent form is one of the most common gaps lawyers find when they review a small company’s records.

Don’t assume an optional secretary means nobody does the work. In a Pty Ltd with no secretary, ASIC lodgements and record-keeping fall to the directors personally. Our guide to company officeholders covers who’s responsible for what.

Public companies also face rules a Pty Ltd never sees. They must hold an AGM within five months of the end of each financial year. Related-party rules in Chapter 2E also mean that giving a financial benefit to a director or their family needs shareholder approval unless an exception applies.

What are the reporting obligations for public and private companies?

This is where the ongoing cost difference lives. A small proprietary company has the lightest load of any company type. A public company has the heaviest, even if it’s tiny.

Obligation	Small proprietary company	Large proprietary company	Public company
ASIC annual review and fee	Yes	Yes	Yes
Annual solvency resolution	Yes, within 2 months of the review date (unless it lodges a financial report)	Covered by lodged financial report	No (lodges a financial report instead)
Financial report lodged with ASIC	Only in specific cases, such as foreign control, a shareholder request or a CSF raise	Yes	Yes
Audit	Only in those same specific cases	Yes	Yes, with relief for smaller guarantee companies
AGM	No	No	Yes

A proprietary company is large if it hits two of three tests for the financial year. Those tests are consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, and 100 or more employees. ASIC’s large and small proprietary company tests spell out how to count each one. Most businesses reading this will sit comfortably in the small category for years.

Companies limited by guarantee get tiered relief. Below $250,000 in annual revenue, they don’t need to prepare a financial report unless members or ASIC ask. Between $250,000 and $1 million, a review can replace a full audit. Registered charities report to the ACNC rather than ASIC.

What we see in Lawpath briefs

Almost nobody comes to Lawpath’s lawyers asking whether to become a public company. The real problems show up earlier, inside ordinary Pty Ltd companies, and they decide how painful growth gets later.

Co-owned companies with nothing in writing. A recurring brief: two founders, a company that’s been running for a year or two, and no shareholders agreement or custom constitution. It surfaces when one founder wants out or a new partner wants in. Everyone has to negotiate the rules after the stakes are already real.

Equity promised before the cap table is clear. Founders regularly arrive wanting an investment agreement for incoming investors and advisors, with no term sheet and percentages that don’t add up when written down. Lawyers spend the first stretch of the job just reconciling who owns what. A one-page cap table before the conversation saves real money.

Advisory equity that quietly counts toward the 50. Advisors aren’t employees, so their shares count toward the proprietary company limit. Founders rarely track this until a later round makes them do the maths.

None of these problems need a public company to fix. They need two documents and a spreadsheet, sorted while everyone still agrees.

Public vs private company: which should you choose?

For almost every small business, startup and family company, the answer is a Pty Ltd. Choose public only when you can name the specific thing a proprietary company stops you from doing.

Stay proprietary if you:

• Have fewer than 50 non-employee shareholders now and in the next funding round
• Plan to raise from angels, VCs, sophisticated investors or a CSF campaign
• Want one director and minimal annual admin
• Need a corporate trustee for a family or unit trust

Go public if you:

• Plan to offer shares to the general public with a prospectus
• Are preparing for an ASX listing in the next year or two
• Expect to pass 50 non-employee shareholders outside a CSF raise
• Are a charity, club or member association that needs a company limited by guarantee

A common mistake is registering as public early because it “looks more established”. Customers don’t care, and you’d be signing up for three directors, a secretary, an AGM and an audit with nothing to show for it. Register as a Pty Ltd, build the business, and convert when the cap table forces the question.

Can you convert a proprietary company into a public company?

Yes. You don’t need to wind up the old company or register a new one. The ACN and ABN stay the same, and contracts carry on. The usual steps look like this:

1. Make sure you’ll meet public company minimums: 3 directors (2 living in Australia) and a secretary living in Australia, each with consent forms and director IDs in place.
2. Review your constitution. Pty-specific clauses, such as transfer restrictions and the 50-shareholder limit, need to come out. Changing a constitution needs a special resolution.
3. Pass a special resolution of shareholders (at least 75% of votes cast) to change the company type and update the name from Pty Ltd to Ltd.
4. Lodge the change of company type application with ASIC, along with the resolution and any amended constitution.
5. Set up public company systems from the first financial year after conversion: an auditor, an AGM timetable and related-party approval processes.

It also works in reverse. A public company with no more than 50 non-employee shareholders can convert back to proprietary by special resolution. That’s handy if a planned IPO falls through and you don’t want to keep paying for public company compliance.

If a proprietary company goes over 50 non-employee shareholders outside the CSF exception, ASIC can direct it to convert. Don’t let it get to that point. Check your shareholder count before every round.

Public vs private company checklist

Run through these before you register, or before your next raise:

• How many non-employee shareholders will you have after the next round, counting advisors?
• Do you need to offer shares to the general public, or will private and CSF raising do?
• Is an ASX listing a real plan or a someday idea?
• Are you a business with owners or an organisation with members?
• Can you fill three director seats and a secretary role with people who’ll do the job properly?
• Do you have a budget for an annual audit and AGM?
• Is there a written shareholders agreement and a constitution that fits how you actually run things?

If you answered “no” or “not sure” to the last question, fix that first. It matters more than the company type.

FAQs

What is the difference between a public and a private company in Australia?

A private (proprietary) company has no more than 50 non-employee shareholders and can’t make public share offers. A public company has no shareholder cap and can raise from the public, but needs at least 3 directors, a company secretary, an AGM and audited financial reports.

What is a proprietary company?

A proprietary company is a privately held Australian company with “Pty Ltd” in its name. It can have up to 50 non-employee shareholders, needs only one director living in Australia, and can’t offer shares to the general public. It’s the most common company type for small businesses.

Is a Pty Ltd company public or private?

A Pty Ltd company is private. “Pty” stands for proprietary, which is the legal term for a private company in Australia. A company ending in just “Ltd” is a public company.

Does a public company have to be listed on the ASX?

No. A public company can stay unlisted forever. Many charities, sporting clubs and member associations are unlisted public companies limited by guarantee. Listing is a separate step with its own Listing Rules.

Can a private company sell shares to the public?

Not through a general public offer. A Pty Ltd can raise privately using exemptions for small-scale personal offers, sophisticated and professional investors, and senior managers. Eligible proprietary companies can also raise from everyday investors through a licensed crowd-sourced funding platform.

How many shareholders can a private company have in Australia?

Up to 50 non-employee shareholders. Current employees, and former employees who got shares while employed, don’t count. Crowd-sourced funding shareholders don’t count either. Advisors and contractors with equity do count toward the cap.

How many directors does a public company need?

At least three, not counting alternate directors, and at least two must ordinarily live in Australia. A public company also needs at least one company secretary who lives in Australia.

Do public companies have to hold an AGM?

Yes. Public companies must hold an annual general meeting within five months of the end of each financial year. Proprietary companies don’t have to hold AGMs at all.

Is a public company better than a private company?

Not by default. A public company gives you wider fundraising options at the cost of more directors, meetings and audits. For most small businesses and startups, a Pty Ltd does everything needed at a fraction of the admin.

Can a private company become a public company?

Yes. You pass a special resolution, update the constitution, appoint the extra directors and a secretary, and lodge a change of company type application with ASIC. The company keeps its ACN, ABN and contracts.

If you’ve read this far and you’re still a bit unsure, that’s normal. You don’t need to plan your IPO today. You need the right structure for the next two or three years, plus clear paperwork between the people who own it.

For most founders, that means a Pty Ltd with a proper company constitution and a shareholders agreement, done once and done right. Lawpath has helped more than 650,000 Australian businesses get set up this way, with lawyers on hand when the questions get harder.

Register your company with Lawpath today.