No liability

No liability

A no-liability company in Australia (suffix NL) is a company which, under the Corporations Act 2001 (Cth), must have as its stated objects that it is solely a mining company and that it is not entitled to calls on the unpaid issue price of shares. It is a company which is restricted to mining activities and is the only sort of corporation which is entitled to this form of liability, given the sometimes financially risky business of mining. Most of the usual rules in the Act apply to no-liability companies, save that a mining company must adopt a constitution which states their objects as mining.

No-liability companies should not be confused with the concept of limited liability.

No-liability companies are differentiated from other companies as their shareholders are not liable to pay calls on unpaid shares. This differs from traditional company structure where the purchase of shares is a binding contract. Should the shareholder chose not to pay when there is a call, the shareholder forfeits both the unpaid and paid shares.[1] This encourages investment in potentially risky mining ventures, as a shareholder with unpaid shares can chose to withdraw from the company with no legal consequences. A successful mining company usually converts to a limited liability company when advantageous.

  1. ^ http://www.anz.com/edna/dictionary.asp?action=content&content=no_liability



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