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While most companies in New Zealand are private, it is often the public companies that draw attention and news headlines, such as when a company’s share price dives, or declares record profit. However, it can often be confusing to understand the differences between private and public companies, and what actually changes when a company “goes public”. This article sets out the key differences between private and public companies.

Raising Money from the General Public

The most well-known distinction between private and public companies is the ability for the general public to invest in the latter. Public companies “list” themselves on a stock exchange, such as the NZX in New Zealand. Almost anyone can then buy or sell stocks in that company through this exchange. Private companies cannot trade on stock exchanges, and cannot easily raise money from the public.

Being a public company means having to abide by much stricter rules and regulations in comparison to private companies. The reason why public companies are willing to do this is because being able to raise money from the public is extremely valuable. Some advantages of listing as a public company include:

  • being able to raise a large amount of cash very quickly in order to finance the growth or expansion of the business;
  • increased exposure for your brand and business through the listing process, including in the media and investment community;
  • getting a more objective valuation for your company; and
  • increasing the liquidity of your company’s shares by letting them trade on a ‘liquid’ market, e.g. where others can buy and sell them easily.

Disclosure Requirements: What Are The Differences Between Private and Public Companies?

Public companies have to make more disclosures in comparison to private companies in New Zealand. For instance, directors of public companies must ensure they disclose information that might influence the price of the company’s shares, and cannot keep this information to themselves (or they risk allegations of ‘insider trading’).

There are other kinds of disclosure requirements in New Zealand. 

An example of a new requirement is the recently-announced mandatory disclosure for climate-related risks. This new policy will come into effect in 2023, and will require public companies (and other organisations, such as asset managers) to disclose their climate risks.

Many companies prefer the flexibility of being a private company, without most of these disclosure obligations and the costly and time-consuming burden they can represent each year. 

Financial Reporting Obligations: What Are The Differences Between Private and Public Companies?

A critical difference between public and private companies is financial reporting. Public companies must release a financial report every financial year, typically alongside a commentary or report written by the company’s directors. This can be an expensive and time-consuming process. The same obligation does not apply to most private companies. 

However, the law in New Zealand does require some large New Zealand companies to also file financial reports.

For example, if your New Zealand company is a subsidiary of an overseas company (for the purpose of incorporation), then you must also submit financial reports if the:

  • total assets for the company and its subsidiaries are worth more than $20 million; or
  • total revenue for the company is more than $10 million.

A NZ company with 25 per cent or more of its shares held overseas are similarly required to submit financial reports, if:

  • total assets for the company and its subsidiaries are more than $60 million; or
  • total revenue for the company is more than $30 million.

The definition of “held overseas” refers to shares held either by a company incorporated outside New Zealand, or a person who does not usually live in New Zealand.

Key Takeaways

The main difference between a public company and a private company in New Zealand is that the general public can invest in public companies, typically through a stock exchange like the NZX. Being “listed” on a stock exchange, and being able to raise money through the public, carries a lot of benefits for companies.

However, there are a lot of additional rules and obligations that apply to public companies in exchange for the privilege of selling shares to the general public. These include disclosure obligations, which generally reflect the idea that the company cannot keep any important information from shareholders, particularly if that information would affect the share price. Other obligations involve additional financial reporting, which also affects some large private companies. These obligations can be quite expensive and demanding to meet, which is why many companies (particularly smaller companies) choose to stay private. If you want to know more about the differences between private and public companies in New Zealand, feel free to call LegalVision’s business lawyers on 0800 005 570, or complete the form on this page.


Can private companies raise money from the public?

Generally, no. Only public companies, who undergo significant obligations and additional disclosure requirements, are allowed to sell shares to the public. This rule is aimed at protecting the general public and provide certainty to those who want to invest in New Zealand companies.

Do any private companies need to disclose financial information?

Yes, some large companies do need to complete comprehensive financial disclosures each year. Whether companies need to depends on how large they are (typically over $10m revenue) and the extent to which they are owned by overseas-based investors.

What is climate risk reporting?

A new requirement for public companies and some specific private companies in the financial sector, beginning in 2023. These companies will need to report on the risks posed to the company by climate change.

Why do companies go public?

While there are a variety of reasons, often companies want to “go public” so that they can raise money through selling a large number of shares to investors, and fund growth. Companies also receive additional exposure, including in the media and investment community.

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