The article conducts discussion over No Liability company and its registration process. In regards to which certain conditions which are necessary for company to fulfil are determined. Once the conditions are accomplished then the company will be requiring to accomplish the steps to attain the certificate of registration pertaining all the details and of the entity.
- What is a No Liability company?
- What is the conditions to be meat for becoming a No Liability company?
- What is the difference between a Limited Liability and a No Liability company?
- What are the steps to register a company as a No Liability company?
REGISTRATION OF A NON LIABILITY COMPANY
A No Liability company is an organisation or an entity or a firm which holds limited liability and it is a public company that holds the principle activity and action to conduct mining or oil exploration. These form of companies are known “No Liability” as they do not held responsible for paying any unpaid or due issue prices of shares to the holders or the public. This form of organisations or business ventures most probably attracts those investors and who are will to take risky of investing in unpredictable projects like mining. No one is interested in putting their money in those areas from which they are unsure of any profitability and benefits.
Illustration 1: No Liability Companies, 2021
This is what makes the No Liability company unique from others, investors gains the benefit of withdrawal any time when they wish to and are not even bothered to or called for any unpaid shares. This enable the shareholders the power of making their own decisions of investing with lower risk and more freewill. In regards to the registration of a No Liability company the business owner or owners has to meet with certain criteria or conditions. These are determined by the Corporation Act, presented underneath:
- First and Foremost is the constitution of the company should clearly state its purpose that it is being established for mining or oil exploration.
- The next agenda is to make sure that the entity has Share Capital.
- The third and the last requirement to be meat for registering as a No Liability company, it loses all the contractual rights to make any calls to recover any payment from shareholders who are unable to pay their debts and fails in clearing their dues.
A No Liability and a Limited Liability company are commonly misjudged and are regarded as same. But they are different from one another, A Limited Liability company is the one in which owners hold very limited personal liabilities in their total debts and liability balance. On the contrary a No Liability company is the one with a structure in which owners that is shareholders of the entity are not held liable for their part of outstanding share payment without their will. This structure of a No Liability company is determined and associated with the Australian companies. A key benefit of a limited liability company is keenly related to the flexibility offered to the management as well some tax advantages. A benefit of a No Liability company is for shareholders as any money company earns above the share price and cost incurred is allocated and returned to the shareholders back.
In particular a No Liability company in Australia and in accordance to The Corporation Act 2001, has a key restriction to stick to mining activities and differentiated from others as the shareholders are set free of any liability to make share payments without their will. It is a compulsion that a No Liability has its abbreviation NL mentioned at the end of the name of the organisation. In order to register a company as No Liability there are certain steps which needs to be followed and the body corporate which has not yet been registered as a company also holds the need to fulfil the said criteria in order to register itself as a No Liability company. Following are the steps that a company must undertake in order to register itself as a No Liability firm in the prescribed order as mentioned underneath:
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A No Liability company is limited by shares.1 As per s112(2) Companies Corporation Act, 2001. Above sections identified the conditions which are needed to be fulfilled by the company to be registered as a No Liability. But below mentioned are the steps for the company to be undertaken for getting registered.
Illustration 2: Corporations Act 2001
Reserving a Company Name- As per s.148, a company may register itself under a company name or operate under its ACN which is its Australian Company Number. This number is generated by the Application Specific Integrated Circuit (ASIC) upon registration. A company is most generally needed as it provides it a unique identity and distinguishes it from other in the market. It is a mandate that the company name must be included the words “No Liability” or “NL” at the end of its name to notify the public about the nature ans type of its organization.
Members and Obtaining Consents- The incorporators holds the power and responsibility to identify and clarify the business owners that the company shall follow the replaceable rules mentioned in the Corporations Act or requires to draft its own rules as constitution. As a No Liability company is a public company it holds the essential to have one secretary and at least 3 directors. As well in regards to the consent forms the member with respective positions have to submit them to agreeing with working in the presented position like a director will give consent to act in the capacity of a director, a member shall give consent to act in the capacity of a member and so on. A the No Liability company the member that is shareholders also has a share capital and for which they are mandated to consent in for taking up a respective amount of shares in order to get the company registered and pay the amount they owe for their shares.
Illustration 3: ASIC Regulatory Portal, 2021
Application to Application Specific Integrated Circuit (ASIC)-Form 201 is sent for securing and providing a name to the entity which is its unique identity in a form of an application to the Application Specific Integrated Circuit (ASIC). The rules referred to the application are mentioned under s.117 that are as follows:
State That The Entity Is A No Liability
Provide Details About
- Name of the organisation
- Address of the organisation
- Office that will be proposed to get registered
- Names and addresses of members
- Directors and Company secretary
Declaration Of The Share Capital, Share Number Issued To Each And The Amount Which They Have Consented To Pay.
Registration by Application Specific Integrated Circuit (ASIC)-The Application Specific Integrated Circuit (ASIC) will review the application made by the company and make their choice to register the company. The ASIC will be making their decisions on the basis of the fulfilment of the requirements mentioned. Then the ASIC body may issue certificate of No Liability company with all required information and details.