Australian companies are either proprietary companies or public companies.

A company may be a proprietary company if it has no more than 50 non-employee shareholders. A proprietary company is subject to less stringent reporting, disclosure and corporate governance requirements than a public company. The reporting and disclosure requirements of proprietary companies differ depending on whether the scale of the activities of the proprietary company result in the proprietary company being classified as a small proprietary company or a large proprietary company.

As a proprietary company need only have one director and one shareholder, it is possible that one person can be in complete control of the company. The Corporations Act 2001 (Cth) has provisions specifically designed to deal with the sole director/shareholder company.

See Proprietary and public companies.

A public company is any company that is not registered as a proprietary company. There are four types of public company, with the type determined by the liability of members to contribute to the company's debts in a winding up where there is a deficiency of assets against liabilities.

The four types are:

• a company limited by shares;

• a company unlimited with share capital;

• a company limited by guarantee; and

• a no liability company.

Whilst it is important to select the most suitable type when the company is registered, a company can change its type as the company and its operations change. Often a proprietary company limited by shares will want to change its type to a public company limited by shares to enable it to make offers that require disclosure. Also, often a public company limited by shares will change its type to a proprietary company when access to external debt and equity is no longer needed (for example, after a privatisation).

See Types of public companies.

Proprietary companies can engage in extensive, but limited, fundraising activities by making offers that do not require disclosure. Public companies are not restricted in their fundraising activities and are permitted to seek investments of debt or equity through offers that require disclosure. As a consequence, public companies are more highly regulated than proprietary companies.

Due to the significantly higher regulatory burden and associated costs of a public company, in most instances a proprietary company should be used unless a public company is needed. If a proprietary company is to be used, it is almost always registered as a company limited by shares and not an unlimited company. Generally, a public company is only needed where the company wishes to be recognised as a charitable institution for tax purposes or the company needs to raise funds and cannot raise sufficient funds through offers that do not require disclosure. If a company wishes to be recognised as a charitable institution for tax purposes, then generally the company should be company limited by guarantee. If a public company is needed but not for charitable purposes, it generally should be registered as a company limited by shares but not an unlimited company.

See What company should you use?