LAW 6000 Business and Corporate Law-Features of a Public Company 

A company is characterized as an incorporated body that is created by a process termed as ‘incorporation’. A company is deemed as a separate legal entity, an artificial person. Thye court recognized a company to be different from its shareholders, directors, creditors and employees in Salomon v A. Salomon Co. Pty Ltd [1897] AC 22.a proprietary company must be limited by shares or may be an unlimited company with a share capital.  a proprietary company must not comprise more than 50 non-employee shareholders, and a proprietary company must not engage in fundraising that would require the company to issue disclosure document such as prospectus, to the investors under chapter 6 D, 113(3) of the Act. 

 Section 45 A of the Act differentiates proprietary companies as small proprietary or large proprietary companies.  The large or small proprietary companies differs in issues relating to consolidated gross assets, operating revenue and the number of persons employed in the company (Carey, Potter & Tanewski, 2014). The proprietary company must appoint a secretary. The company secretary must be above 18 years of age to hold the position similar to the directors. A person may be a director as well as the secretary of the company (French et al., 2014). The secretary of the proprietary company is under statutory obligation to perform his or her responsibilities as laid down under the Corporations Act 2001 (Cth).   

Features of a Public Company 

 A public company has the following characteristics:  A public corporation is a separate legal entity having perpetual succession and a common seal.  The composition of the board of directors is laid down in the Articles of Association of the company.  

The directors are elected by the shareholders from among the shareholders in the annual general meeting of the company.  The boards of directors act as the representatives of the shareholders in the management of the company.  A public corporation comprises a minimum number of seven shareholders and the company may have unlimited number of shareholders.  

 The company may have as many shareholders as it is possible for the share capital of the company to accommodate. There must be a minimum number of two directors and a maximum number of directors are twelve (Hannigan, 2015). 

Legal Requirement of Establish a Public Company 

In order to set up a company the following three essential steps must be followed: The name of the company must be registered with the ASIC and the company must obtain an Australian Company Number; The company must have registered office ; The directors and the secretary of the company must give written consent  

In order to set up a proprietary company, the name of the company must be registered and approved by ASIC.  A proprietary company must include the word ‘proprietary’ or the abbreviation ‘Pty’ in its name.  Every director of the company is required to give written consent, which forms the part of the process of the registration application.  

The Australian Securities and Investment Commission (ASIC) must approve all the application for registration of the company.  After the company is registered as a proprietary company, the ASIC shall allocate a nine-digit number known as the Australian Company Number (ACN).  A business enterprise may obtain an Australian Business Number  

A proprietary company must have at least one director as laid down under section 201 A (1) of the Act whereas a public company must have at least three directors as stipulated under section 201 A (2) of the Act.  The proprietary company requires at least one of its directors to reside in Australia under section 201 A (1) and the public company requires at least two of its directors to reside in Australia section 201 A (2) of the Act.  

A proprietary company may or may not have a company secretary under section 204 A (1) of the Act and a public company must have at least one company secretary and one of the secretary must be residing in Australia under section 204 A (2) of the Act.  A proprietary company is not required to keep its registered office open the public under section 142 (1) and 145 (1) of the Act whereas a public company is under statutory obligation to keep its registered office open to the public during certain hours in a working day under section 145 (1) of the Corporations Act 2001.  

 A proprietary company is not required to appoint or have an auditor as a result of the section 325 of the Act. On the other hand, the law requires the public company to appoint and have an auditor to maintain the financial statement of the company under section 327 (A) of the Corporations Act 2001.  

Why a Company Should be Floated as a Public Company 

The companies that are listed on a stock exchange are worth more than companies that are similar but are privately held. A public company must issue prospectus and the information contained in the prospectus and the annual reports diminishes the uncertainty regarding the performance of the company.  Therefore, it accelerates the value of the business as the public becomes aware of the information thus, it enhances the transparency (Mason & Brown, 2013). 

The reasons and benefits of making a company public: Increases the share price and the liquidity of the company; Increases the ancillary benefits It enables the company to have easy and better access to alternative sources of capital; Improves the image and enhances the prestige of the company, and It motivates the employee and the management of the company. 

References 

Almklov, P. G., & Antonsen, S. (2014). Making work invisible: new public management and operational work in critical infrastructure sectors. Public Administration, 92(2), 477-492. Carey, P., Potter, B., & Tanewski, G. (2014).

Application of the reporting entity concept in Australia. Abacus, 50(4), 460-489. Chen, V., Ramsay, I., & Welsh, M. A. (2016). Corporate law reform in Australia: An analysis of the influence of ownership structures and corporate failure. Coffee Jr, J. C., Sale, H., & Henderson, M. T. (2015).

Securities regulation: Cases and materials. Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.