Understanding the Difference Between Public Corporation and Private Corporation in Australia

When starting or scaling a business in Australia, choosing the right type of company structure is a crucial decision. One of the most common questions business owners face is: what’s the difference between a public corporation and a private corporation? While both types offer limited liability and are regulated under the Corporations Act 2001, their differences are significant in terms of ownership, regulation, and access to capital.

In this article, we’ll break down the distinctions between public and private corporations in the Australian context to help you make informed decisions—whether you're setting up a business or simply improving your understanding of corporate structures.

Definition and Ownership Structure

At a foundational level, the main difference between public and private corporations in Australia lies in who can own shares and how those shares are traded.

Private Corporation (Proprietary Limited Company or Pty Ltd)

A private corporation, commonly referred to as a Pty Ltd company, is a business entity that is privately held. It cannot sell shares to the general public, and it must have no more than 50 non-employee shareholders. These types of companies are often owned by a small group of investors, family members, or a tight-knit group of business partners.

• Not listed on the Australian Securities Exchange (ASX)

• Ownership is generally restricted to known individuals or groups

• Shares cannot be freely traded on the open market

Private corporations are particularly suitable for small to medium-sized enterprises (SMEs) in Australia who want to maintain tighter control over the company’s direction without the complexities of public reporting obligations.

Public Corporation (Limited Company or Ltd)

A public corporation, on the other hand, can offer its shares to the public and is eligible to be listed on the ASX. Even if not listed, a company that has more than 50 non-employee shareholders is considered public by law. Public corporations are typically larger businesses aiming to raise capital from a broader investor base.

• Can sell shares to the public

• Often listed on the ASX (but not always)

• Subject to higher levels of transparency and regulatory compliance

Public corporations often have thousands of shareholders, with ownership spread widely. Think of major Australian companies like BHP, Qantas, or Woolworths—these are public corporations whose shares can be bought and sold by anyone through the stock exchange.

Compliance, Reporting, and Capital Raising: Key Differences Between Public and Private Corporations in Australia

Now that we’ve explored the ownership structures of public and private corporations in Australia, it’s time to dig deeper into their legal responsibilities, financial reporting standards, and capital-raising capabilities. These aspects significantly impact how each company type operates—especially in the context of growth, governance, and investor relations.

Regulatory Compliance and Reporting Obligations

A crucial difference between public corporation and private corporation is the level of regulatory oversight they are subjected to under the Australian Securities and Investments Commission (ASIC) and, if listed, the Australian Securities Exchange (ASX).

Public Corporations

Public companies in Australia are required to meet stringent compliance and reporting standards. These requirements exist to protect public investors and maintain trust in the market.

• Must hold an Annual General Meeting (AGM)

• Must appoint at least three directors, with at least two residing in Australia

• Required to lodge audited financial statements with ASIC

• Subject to continuous disclosure obligations if listed on the ASX

These obligations are designed to ensure financial transparency, reduce fraud, and allow shareholders to make informed decisions. As a result, public companies often maintain a dedicated legal and compliance team to stay in line with these requirements.

Private Corporations

Private (Pty Ltd) companies in Australia enjoy greater privacy and less demanding reporting obligations, particularly if they are considered small proprietary companies by ASIC.

• Not required to hold an AGM

• Only need one director, who must reside in Australia

• Often not required to have their accounts audited

• Minimal financial disclosure obligations unless they exceed certain thresholds

This reduced regulatory burden makes private corporations ideal for entrepreneurs, family businesses, and start-ups that prefer operational flexibility over public scrutiny.

Capital Raising: Public Access vs Private Investment

One of the biggest reasons a company chooses to go public is to raise capital from a broad base of investors. Here’s how it differs between the two types of corporations:

Public Corporations

Public companies have greater access to funding options. They can:

• Raise capital through Initial Public Offerings (IPOs)

• Issue additional shares through Secondary Public Offerings

• Attract investments from institutional investors and the general public

Being listed on the ASX boosts the company’s visibility, credibility, and valuation potential. However, this also means more pressure to perform, meet market expectations, and maintain shareholder value.

Private Corporations

Private companies raise capital through private placements, venture capital, or shareholder loans. The trade-off for maintaining privacy and control is having limited access to public funding.

• Cannot issue shares to the public

• Must rely on internal funding or private equity

• Growth is often slower unless they pursue strategic investors or partners

While these limitations may seem restrictive, many successful South African and Australian SMEs choose to stay private for as long as possible to retain full ownership and decision-making power.

Real-World Implications for Australian Businesses

Choosing between a public or private corporate structure depends on a variety of factors—such as the growth trajectory, ownership preferences, and appetite for regulation.

A public corporation is ideal for businesses aiming to scale rapidly and attract a wide pool of investors, while adhering to full transparency.

A private corporation is better suited for companies that value control, confidentiality, and leaner operations, such as family-run businesses, start-ups, and smaller service providers.