Unlisted Public Company Registration

The financial reporting obligations of an unlisted public company depend on whether it is a company that is:

• Not a disclosing entity or a company limited by guarantee – these public companies must prepare annual financial reports in accordance with chapter 2M of the Corporations Act 2001 (Cth). These reports must be audited, lodged with ASIC within four months of the financial year end, and, sent to members by the report due date or 21 days before the AGM (whichever is sooner).
• Not a disclosing entity – these public companies are not required to comply with the same reporting requirements as the above if all conditions of ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 are met and the company is not a borrowing corporation, the guarantor of such a borrower, or, a financial services licensee. These companies must be a wholly owned entity and have undertaken a deed of cross guarantee with every company in the closed group.
• Limited by guarantee – public companies limited by guarantee are required to prepare annual financial repost and a director’s report with specific disclosure as set out in section 300B of the Corporations Act 2001 (Cth). These reports must be prepared in accordance with Chapter 2M of the Corps Act and must be audited or reviewed.

Once a public company lists on the stock exchange, their reporting requirements may change.

A public company is the correct company structure for listing on the stock exchange (ASX) however companies looking to list on the stock exchange in Australia must meet significant legal and regulatory requirements to satisfy the "listing rules". There are also listing requirements that must be met with regards to shareholders, company size, working capital and reporting. Preparing a company for listing should be handled by solicitors or other professionals.

Public companies can be registered limited by shares or limited by guarantee.

Shares are a unit of ownership providing the shareholder with equity in the company. Shares in a public company can be sold to the general public. Each share in a class of shares in a public company must have the same rights to dividends as each other. Public companies limited by shares are generally used by businesses seeking fundraising from the general public or by companies with over 50 shareholders (as they are not allowed to be private companies per ASIC’s rules).

Public companies limited by guarantee (or CLGs) do not have a share capital or shareholders; instead, the members act as guarantors. The members agree to pay a nominal amount in the event of the company's winding up, known as the members' guarantee. CLGs are used by organisations such as recreational clubs, cultural communities, and charitable organisations in Australia.

Patricia Holdings can help you set up your unlisted public company with shares, or limited by guarantee.

The ASX listing rules can be easily accessed by the public on the Australian Securities Exchange website.

www.asx.com.au
https://www.asx.com.au/regulation/rules/asx-listing-rules.htm

To list a company with Australian Stock Exchange (ASX), the company must satisfy the minimum admission criteria concerning structure, size, free float and number of shareholders. These requirements ensure the quality of the market that ASX operates. The company must:

• have a minimum of 300 non-affiliated investors at $2000 each
• have a free float of 20%
• be of a particular size worked out using the profit test or the asset test.
• If seeking admission under the asset test, the company must also have working capital of $1.5 million

The company does not need to have the required shareholder spread or free float before the listing application is made. The approval for listing is granted subject to the company meeting the shareholder spread requirement through the offer of shares associated with the listing application.

Outside of ASIC’s reporting requirements, public companies listed on the stock exchange must also follow the below reporting criteria:

• Financial reporting is required on a half-yearly and annual basis in Australia
• Certain companies that are listed without a track record of revenue or profit are required to also file quarterly cash flow statements.
• Mining and oil and gas exploration companies are required to file quarterly reports on cash flow, and activities including changes in tenement interests, issued and quoted securities.

In Australia, there are two main categories of companies – private (proprietary) (Pty Ltd) companies and public (Ltd) companies with private companies being the most common. The key difference between proprietary companies and public companies are the following:

• In terms of ownership structure, private companies are owned by a small group of individuals or a single entity, and their shares are not publicly traded. Ownership is typically closely held, allowing for greater control and decision-making within a small group. This structure often leads to streamlined operations and a cohesive management approach. Unlisted public companies, while privately owned like private companies, differ in that they may have a larger number of shareholders. Despite not being listed on stock exchanges, these companies can attract investments from a broader pool, blending the characteristics of private ownership with a wider shareholder base. However, their shares remain unavailable for public trading, distinguishing them from both private companies and listed public companies.
• In terms of capital acquisition, private companies usually rely on personal funds, loans, or investments from a select group, such as angel investors or venture capitalists. This process is more selective and slower but helps maintain control and privacy. However, private companies have limited ability to raise large amounts of capital compared to public companies due to the lack of publicly traded shares. Unlisted public companies have more diverse options for raising capital. While they are still privately owned, they can attract investments from a larger pool of private investors, without the regulatory requirements of being publicly listed. Although they lack the vast capital access of publicly listed companies, unlisted public companies can still secure substantial funding through private placements.
• Regarding exit strategies, private companies typically achieve liquidity through business sales, mergers, or transfers within a family. Liquidity events are rare and often require careful planning. In contrast, shareholders in unlisted public companies have more options for liquidity, such as private share sales or forming strategic partnerships. Although these companies are not publicly listed, their larger shareholder base offers more opportunities for liquidity and flexibility in realizing investment value.

While both public and proprietary companies are regulated by ASIC, the level of disclosure a company has to make to ASIC varies depending on their company type. Most small to medium proprietary companies will not be required to lodge financial reports with ASIC but all public companies (unless otherwise exempt) must disclose financial statements, directors’ reports and audited accounts on an annual basis. They must also hold an Annual General Meeting.

Most small and medium businesses will choose to register as a proprietary company limited by shares; however, they are restricted to a maximum of 50 shareholders, so sometimes a small unlisted public company is a better fit.

Generally speaking you should be able to convert your unlisted public company to a proprietary company down the road. During the life of your company, you may decide that the company type you registered with no longer suits the activities or nature of your business. A special resolution of the members must be passed agreeing to the conversion and a form 205 and 206 lodged with ASIC. Patricia Holdings can help you with these lodgements – contact us today.

Section 162 of the Corporations Act states that only some kinds of company conversions are allowable.  These are outlined below:

In Australia, there are four different types of public companies. These include:

• Public companies limited by shares
  The same as a proprietary company limited by shares, a public company that is limited by shares is a company where the liability of its members is limited to the nominal amount of their shares. Where a proprietary company has a maximum of 50 shareholders though, this public company type has no limit.
• Public companies limited by guarantee
  The difference with a company that is limited by guarantee is that members can guarantee a fixed amount to be undertaken to contribute to the company when it is wound up. These types of companies have no share capital and are generally used for NFPs and Community organisations.
• Unlimited public companies with a share capital
  An unlimited public company with a share capital is a company where its members liability is not limited.
• No liability companies (mining and resource companies)
  In Australia, a no liability public company is a type of public company that has share capital. They can only be used where the principal activity of the company is that of mining or resource exploration.

Patricia Holdings offers two types of public companies – unlisted public companies limited by shares and Public Company Limited by Guarantee (CLG).