A private company is a company that is registered as a proprietary company under the Act. Section 112 of the Act establishes two types of companies – proprietary companies and public companies. Section 45A of the Act states that a proprietary company must:
- have no more than 50 shareholders, although employee shareholders and shareholders connected with crowd sourced funding (CSF) offers do not count for this purpose; and
- not do anything to require disclosure to investors under Chapter 6D (except in limited circumstances).
This section of the Act also distinguishes between large and small proprietary companies. To be a small proprietary company after 1 July 2019, the company must satisfy at least two of the following requirements:
- the consolidated revenue for the financial year of the company and the entities it controls (if any) is less than $50 million;
- the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls (if any) is less than $25 million;
- the company and the entities it controls (if any) have fewer than 100 employees at the end of the financial year.
A large propriety company is one which does not meet the tests to be a small private company. As a general rule only large proprietary companies are required to have their accounts audited and to lodge them with the Australian Securities and Investments Commission (ASIC). However, there are some situations, such as for companies controlled by foreign companies, where small private companies are also required to lodge audited accounts.