(b) That's wrong. Proprietary companies may vary greatly in size, from a single director/shareholder company to much larger companies. The size of a proprietary company is important because this factor affects the extent to which it is regulated. For example, small proprietary companies have few duties of disclosure and reporting whereas larger proprietary companies are obliged to prepare financial statements and lodge them with ASIC.

But all proprietary companies are subject to two important constraints. In the first place, a proprietary company is not allowed to have more than fifty shareholders (members), not counting shareholders who are also employees of the company.

Secondly, a proprietary company is not allowed to raise funds by offering shares to the public or engaging in some other types of public fundraising. This means that a proprietary company cannot raise large sums of capital by inviting members of the public to buy shares in the company. If a company needs to have more than 50 shareholders, or if it wants to offer shares to members of the public, it must be a public company.

Public companies are subject to greater regulation than proprietary companies because there is a greater need to protect the interests of the many persons involved. In Australia, about 90% of companies are proprietary companies.