What company should you use?

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.

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