If you're building a private company with ambitions to scale, go public, or simply understand your governance obligations, you need to know the fundamental differences between how public and private companies are governed in the UK.

The distinctions aren't just academic. They have real implications for your legal obligations, your board structure, your relationship with shareholders, and ultimately, your ability to raise capital and grow.

This guide breaks down everything you need to know about public versus private company governance, written for founders and directors who want to understand the landscape without wading through dense legal texts.

The Fundamental Legal Distinction

Before we dive into governance differences, let's establish the basics.

What Is a Private Company?

A private limited company (Ltd) is the most common business structure in the UK. Key characteristics:

  • Limited share transferability: Shares cannot be offered to the general public
  • Fewer regulatory requirements: Less onerous compliance obligations
  • Flexibility: Greater freedom in how you structure and run the company
  • Privacy: Less public disclosure required

In the UK: Most startups, SMEs, and family businesses operate as private limited companies. There are over 4.5 million private companies registered in the UK.

What Is a Public Company?

A public limited company (PLC) can offer shares to the general public and may (but doesn't have to) list on a stock exchange. Key characteristics:

  • Higher capital requirements: Minimum share capital of £50,000 (with at least 25% paid up)
  • Stricter governance: Mandatory compliance with enhanced regulatory standards
  • Greater transparency: Extensive public disclosure obligations
  • Transferable shares: Shares can be freely traded (if listed)

In the UK: There are approximately 5,000-6,000 public companies, with around 2,000 listed on the London Stock Exchange or AIM.

The Grey Area: Unlisted Public Companies

Not all PLCs are listed on a stock exchange. Some companies adopt PLC status for credibility, to meet regulatory requirements in certain sectors, or as a preparatory step before listing. These "unlisted PLCs" face most of the governance requirements of listed companies but don't have the same access to public capital markets.

Mandatory vs Optional: The Company Secretary Requirement

This is the most immediately obvious governance difference.

Public Companies: Company Secretary Mandatory

Every public company must appoint a Company Secretary under the Companies Act 2006. This isn't optional, and it isn't a formality.

The Company Secretary for a public company must be appropriately qualified, typically holding:

  • Membership of a recognised professional body (e.g., Chartered Governance Institute)
  • A solicitor or barrister qualification
  • Relevant experience demonstrating competence

Why it matters: The Company Secretary is often the most senior governance professional in the organisation, advising the board on compliance, regulatory matters, and corporate governance standards. For listed companies, they typically report directly to the Chairman or CEO.

Private Companies: Company Secretary Optional

Since 2008, private companies in the UK haven't been legally required to appoint a Company Secretary. The role became optional to reduce administrative burdens on small businesses.

But here's the catch: The function didn't disappear. Someone still needs to:

  • File statutory returns
  • Maintain registers
  • Handle board meetings and minutes
  • Manage shareholder communications
  • Navigate constitutional documents

For private companies with growth ambitions, professional company secretarial support remains essential. It's just no longer mandated by law.

Board Structure and Composition

Private Companies: Flexibility

Private companies have significant flexibility in how they structure their boards:

Director Requirements:

  • Minimum of one director (who must be a natural person, not a company)
  • No maximum number of directors
  • No requirement for independent directors
  • Directors can also be shareholders, employees, or officers

Common Structures:

  • Small companies: Often just the founder(s) as director(s)
  • Growing companies: Founders plus investor-appointed directors
  • Mature private companies: Mix of executive and non-executive directors

Board Meetings:

  • No minimum frequency required by law
  • Can be as formal or informal as shareholders agree
  • Often held monthly or quarterly as the company grows

Public Companies: Stricter Requirements

Public companies face more prescriptive rules:

Director Requirements:

  • Minimum of two directors
  • At least one must be a natural person
  • Listed companies must follow the UK Corporate Governance Code (comply or explain)
  • Expected to have independent non-executive directors (typically at least half the board for FTSE 350 companies)

Corporate Governance Code Requirements (for listed companies):

  • Separation of Chairman and CEO roles
  • Senior Independent Director (SID) appointment
  • Minimum three board committees: Audit, Remuneration, Nomination
  • Annual board effectiveness reviews
  • Succession planning for board and senior management

Board Meetings:

  • More frequent (typically monthly or bi-monthly)
  • Highly formal procedures
  • Extensive documentation requirements
  • Detailed minute-taking essential

Shareholder Rights and Communications

Private Companies: Direct and Informal

In private companies, shareholders often have close relationships with management:

Shareholder Meetings:

  • Annual General Meeting (AGM) not mandatory since 2006 (unless required by Articles)
  • Written resolutions commonly used instead of physical meetings
  • Decisions can be made quickly with shareholder consent
  • Less formality in how meetings are conducted

Information Rights:

  • Shareholders entitled to accounts and reports
  • Limited obligations to provide ongoing updates
  • Information flow often informal (especially in small companies)
  • Greater flexibility in what's disclosed and when

Communication Style:

  • Often direct communication between directors and shareholders
  • Email and phone commonly used
  • Formal processes less critical (though increasingly important for VC-backed companies)

Public Companies: Formal and Regulated

Listed public companies operate under strict rules governing shareholder relations:

Shareholder Meetings:

  • AGM mandatory every year
  • Must give at least 21 days' notice (14 for private companies that still hold AGMs)
  • Extensive procedural requirements
  • All resolutions must be properly documented
  • Proxy voting mechanisms required
  • Results publicly disclosed

Information Rights:

  • Extensive disclosure obligations (listing rules, transparency rules)
  • Half-yearly and full-year financial reporting
  • Immediate disclosure of price-sensitive information
  • Regular trading updates expected
  • Corporate governance statements required

Communication Style:

  • Highly formal and controlled
  • Regulatory requirements dictate timing and content
  • Investor relations function typically required
  • All communications reviewed for regulatory compliance

Financial Reporting and Disclosure

Private Companies: Lighter Touch

Accounts Requirements:

  • Must file accounts with Companies House annually
  • Small companies can file abbreviated accounts
  • Medium and large companies face more extensive requirements
  • Audit exemption available for small companies (turnover under £10.2m, assets under £5.1m)

Public Disclosure:

  • Basic information at Companies House (accounts, directors, shareholders)
  • No requirement to publicly disclose management remuneration details (unless large)
  • Greater privacy around business operations
  • Strategic report required only for medium and large companies

Public Companies: Full Transparency

Accounts Requirements:

  • Full audited accounts must be filed
  • No abbreviated accounts permitted
  • Must publish half-yearly results (if listed)
  • Preliminary results announcements (if listed)
  • Extensive notes and disclosures required

Public Disclosure:

  • Annual report often 100+ pages
  • Directors' remuneration report (detailed, including pension contributions, benefits, long-term incentives)
  • Corporate governance statement
  • Strategic report covering business model, strategy, risks, KPIs
  • Audit committee report
  • ESG (Environmental, Social, Governance) reporting increasingly expected

Timing:

  • Strict deadlines for publication
  • Market-sensitive information disclosed immediately
  • Closed periods before results (when directors can't trade shares)

Constitutional Documents and Shareholder Agreements

Private Companies: Customisable

Articles of Association:

  • Can be heavily customised
  • Often tailored to accommodate investor rights
  • Can include specific provisions for different share classes
  • Easier to amend (75% shareholder approval)

Shareholders' Agreements:

  • Commonly used to govern shareholder relationships
  • Can include detailed provisions on:
    • Vesting schedules
    • Drag-along and tag-along rights
    • Pre-emption rights
    • Board composition
    • Reserved matters requiring unanimous consent
    • Exit provisions
  • Remain private (not filed at Companies House)

Share Structure:

  • Significant flexibility to create multiple share classes
  • Preferred shares common in venture-backed companies
  • Ordinary shares with different voting rights possible
  • Can be structured to accommodate complex investor requirements

Public Companies: Standardised and Public

Articles of Association:

  • Must be publicly available
  • Less flexibility to include bespoke provisions
  • Tend to follow standard forms
  • Listed companies expected to align with Corporate Governance Code
  • Amendments require shareholder approval at general meeting

Shareholders' Agreements:

  • Less common in widely-held public companies
  • May exist between significant shareholders
  • Market practice favours governance through Articles and regulatory rules

Share Structure:

  • Typically simpler (often just ordinary shares)
  • Preference shares less common (but not prohibited)
  • Voting rights usually one share, one vote
  • Complex structures can impact investor perception

Regulatory Oversight and Compliance

Private Companies: Companies House

Primary Regulator:

  • Companies House (for statutory filings)
  • HMRC (for tax matters)
  • Sector-specific regulators if applicable

Compliance Obligations:

  • Annual confirmation statement
  • Annual accounts filing
  • Notification of changes (directors, shareholders, registered office)
  • PSC (Persons with Significant Control) register maintenance
  • Relatively straightforward compliance burden

Penalties for Non-Compliance:

  • Late filing penalties (automatic)
  • Potential director disqualification for persistent failures
  • Company may be struck off if persistently non-compliant

Public Companies: Multiple Regulators

Primary Regulators:

  • Companies House (statutory filings)
  • Financial Conduct Authority (FCA) for listed companies
  • Prudential Regulation Authority (PRA) if a financial institution
  • Competition and Markets Authority for certain transactions
  • Sector-specific regulators

Compliance Obligations:

  • Everything required of private companies, plus:
  • Listing Rule compliance (if listed)
  • Disclosure and Transparency Rules
  • Market Abuse Regulation
  • Prospectus requirements for capital raising
  • Takeover Code (if applicable)
  • Ongoing obligations under Market Abuse Regulation

Penalties for Non-Compliance:

  • FCA enforcement action (fines, suspensions, censure)
  • Director disqualification
  • Criminal liability for serious breaches (e.g., insider dealing, market manipulation)
  • Reputational damage
  • Shareholder litigation

Directors' Duties and Liabilities

Directors of both public and private companies owe the same statutory duties under the Companies Act 2006:

  1. Act within powers
  2. Promote the success of the company
  3. Exercise independent judgement
  4. Exercise reasonable care, skill, and diligence
  5. Avoid conflicts of interest
  6. Not accept benefits from third parties
  7. Declare interests in proposed transactions

However, the practical implications differ significantly:

Private Company Directors

Scrutiny Level:

  • Primarily accountable to immediate shareholders (often small group)
  • Less public scrutiny
  • Relationship-based governance often more important than process

Liability Risk:

  • Still personally liable for breaches of duty
  • Wrongful trading and fraudulent trading risks
  • But lower profile means less attention

Conflicts of Interest:

  • Often easier to manage (directors may have multiple roles)
  • Board authorisation typically sufficient
  • Less formal disclosure requirements

Public Company Directors

Scrutiny Level:

  • Accountable to thousands of shareholders
  • Intense media and regulatory scrutiny
  • Every decision potentially subject to public criticism
  • Shareholder activism increasingly common

Liability Risk:

  • Higher exposure to litigation
  • Directors' and Officers' (D&O) insurance essential
  • Class action risk for failures
  • Regulatory enforcement more likely

Conflicts of Interest:

  • Must be disclosed immediately
  • Often require recusal from relevant discussions
  • May prevent appointment in first place
  • Subject to shareholder approval for certain conflicts

Capital Raising and Investment

Private Companies: Relationship-Based

Funding Sources:

  • Founders' capital
  • Friends and family
  • Angel investors
  • Venture capital
  • Private equity
  • Bank lending
  • Alternative lenders

Raising Capital:

  • Direct negotiation with investors
  • Term sheets and investment agreements
  • Can be done relatively quickly (weeks to months)
  • Significant flexibility in deal structure
  • Limited regulatory requirements

Valuation:

  • Negotiated between company and investors
  • No market price
  • Based on comparable transactions, DCF models, negotiating power

Public Companies: Market-Based

Funding Sources:

  • Public equity markets
  • Institutional investors
  • Retail investors
  • Bond markets
  • Bank lending (often on better terms than private companies)

Raising Capital:

  • Prospectus required for public offerings
  • Strict regulatory approval process
  • Pre-emption rights must be considered
  • Roadshows and investor presentations
  • Underwriting arrangements
  • Can take several months
  • Significant transaction costs (legal, accounting, underwriting)

Valuation:

  • Market determined (for listed companies)
  • Share price visible in real-time
  • Subject to market sentiment and volatility

Transitioning from Private to Public

Many successful private companies eventually consider going public. Understanding the governance changes required is critical.

What Changes When You Go Public?

Immediate Changes:

  • Must appoint a qualified Company Secretary
  • Board composition changes (independent directors required)
  • Establish board committees (Audit, Remuneration, Nomination)
  • Implement extensive disclosure controls and procedures
  • Adopt policies required by listing rules

Ongoing Changes:

  • Quarterly reporting cycles
  • Investor relations function
  • Continuous disclosure obligations
  • Higher scrutiny of all activities
  • Loss of privacy
  • Public accountability

Cost Implications:

  • IPO costs: typically £2-5 million+ for a standard London listing
  • Ongoing costs: £500k-2 million+ annually (auditors, legal, compliance, IR, etc.)
  • D&O insurance premiums increase significantly
  • Senior management time diverted to investor relations

Preparation Timeline

Most companies spend 12-24 months preparing for an IPO:

  • 18-24 months out: Governance review, board composition changes, financial systems upgrade
  • 12-18 months out: Pre-IPO funding round, appoint advisers, begin FCA engagement
  • 6-12 months out: Prospectus drafting, due diligence, financial reporting preparation
  • 3-6 months out: Roadshow preparation, regulatory approvals, final documentation
  • IPO: Listing, first day of trading, ongoing compliance

Which Structure Is Right for Your Business?

Stay Private If:

  • You value control and privacy
  • You're not seeking large-scale public capital
  • Your business model doesn't require public markets
  • You want flexibility in governance and operations
  • Your investors are comfortable with illiquidity
  • Compliance costs and public scrutiny don't justify benefits

Examples: Most startups, SMEs, family businesses, PE-backed companies

Consider Going Public If:

  • You need access to large amounts of capital
  • Your business model benefits from brand visibility of public markets
  • Your investors want liquidity
  • You're in a sector where public listing provides competitive advantage
  • You can justify the costs and management time
  • You're ready for intense scrutiny and transparency

Examples: High-growth tech companies, mature businesses seeking acquisition currency, companies in capital-intensive industries

The Middle Ground: Alternative Markets

Between traditional private and fully public, several options exist:

AIM (Alternative Investment Market)

  • London Stock Exchange's junior market
  • Less onerous requirements than Main Market
  • Requires a Nominated Adviser (Nomad)
  • More flexibility in governance
  • Smaller minimum market capitalisation
  • Popular with growth companies

Private Placements and Secondary Markets

  • Remain private but allow some liquidity
  • Platforms like Seedrs, Crowdcube (for smaller companies)
  • Private secondary transactions
  • Less regulatory burden than public listing

Key Takeaways

For Private Companies:

  1. You have flexibility: Use it wisely to structure governance that supports growth
  2. Don't ignore governance: Just because something isn't mandatory doesn't mean it isn't important
  3. Think ahead: If you might raise VC or go public, build appropriate structures early
  4. Document everything: Good corporate hygiene pays off in due diligence
  5. Professional support matters: Even though a Company Secretary isn't required, the function is essential for growth companies

For Public Companies:

  1. Compliance is non-negotiable: Build robust systems and processes
  2. Governance is a competitive advantage: Good governance attracts investors and protects value
  3. Invest in expertise: Quality legal, financial, and company secretarial support is essential
  4. Transparency builds trust: Embrace disclosure obligations rather than treating them as box-ticking
  5. Anticipate scrutiny: Every decision will be examined; ensure your processes can withstand it

The Bottom Line

The governance differences between public and private companies aren't arbitrary. They reflect the different stakeholder bases, capital structures, and societal expectations of each type of organisation.

For private companies, the challenge is building governance structures that are robust enough to support growth and satisfy investors, whilst maintaining the flexibility and speed that make private companies attractive.

For public companies, the challenge is meeting extensive regulatory requirements whilst maintaining board effectiveness and delivering shareholder value.

Understanding these differences allows you to make informed decisions about how to structure and govern your business at each stage of its lifecycle.

Need Expert Governance Support?

Whether you're a private company building governance foundations, preparing for a funding round, or a public company ensuring ongoing compliance, London CoSec provides Chartered Secretary expertise tailored to your needs.

We work with companies at every stage, from startups establishing proper governance frameworks to listed companies managing complex regulatory obligations.

Get in touch: contact@londoncosec.com

About the Author

Lysandros Lysandrides is a Chartered Secretary and qualified lawyer with over 20 years of experience advising both private and public companies on governance matters. He has supported companies through IPOs, managed ongoing compliance for FTSE-listed businesses, and helped growth companies build governance structures that support rapid scaling. He is the founder of London CoSec and a member of the Chartered Governance Institute UK & Ireland.