Business Law 1 Assignment: Steps for Forming No Liability Companies

This report details the formation process for no liability companies in Australia, outlining seven key steps. It begins with the recognition of the company's structure, emphasizing its public nature and involvement in mining or oil exploration. Subsequent steps include selecting a unique company name, deciding on governance methods (replaceable rules or constitution), appointing directors and a secretary, obtaining written consent from officeholders, registering the company through various methods (directly with the government, through an accountant/solicitor, or using a specific form), and displaying the ACN or ABN. The report also provides justification for each step, referencing relevant sections of the Corporation Act 2001, including sections 117, 112, 201A, 204A, 147, 148, and 149. Additionally, the report briefly describes the Royal Commission, its powers, and the banking royal commission's details.

Business law
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Steps for the formation of a No Liability Company
There are six steps for setting up a company in Australia. These steps are same for liability, limited
and no liability company. The no liability company are types of companies that are limited by the
number of shares, the corporation act ensures that the no liability companies are public companies.
The no liability companies in Australia involve activities like oil exploration or mining as par the
corporation act. There are certain requirements that are to be fulfilled for the formation of a no
liability company. These requirements are:
1. They should have share capital
2. The company has to ensure that they are chiefly involved in mining or oil exploration activities
3. It should not possess contractual right of a shareholder to recover calls that are made on its shares
in case they are unable to pay.
These are the three basic criteria that are to be matched for the formation of no liability company.
Once these criteria are fulfilled there are 7 steps that should be taken by the formation of the
company. These steps are as follows:
Step 1: The first step is the recognition of the organisation structure of the company (Frost 2007). In
this case the organisation structure is to be formed considering the steps that take into consideration
the function of a no liability companies that is it has to be public and involved in mining and oil
exploration activities.
Step 2: In this step the name of the company has to be selected, it is not allowed to select a name that
already exists in the market. Second there are only certain position holders in the company who are
able to propose the name like the director, member or a trustee with ASIC copy of trust deed. There
are some characters that are to be registered in the name of the company. Some terms are restricted
which cannot be used. A trademark or logo for the company has to be registered in this case. While
registering a logo it is to be ensured that there is no similar logo used by any other company. The legal
status of the company should be mentioned along with the name of the company ( Ireland 2010). A No
Liability company should use the abbreviation of NL alongside the name of the company.
Step 3: The third step is to decide the method of governing the company. There are two methods for
governing the company the replaceable rules or company constitution. In case the company has a
single director then the company doesn’t need to have a constitution or replaceable rule but once two
directors are in the organisation it automatically operates in replaceable rule (Kent 2011). The share
structure has to be decided in this step as well.
Step 4: A company that is public should appoint 3 directors and 1 secretary among the directors 2
should be Australian resident. In case of a proprietary company there has to be 1 director who should
reside in Australia. The appointment of an office secretary is optional but in case an office secretary
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is appointed it has to be ensured that the person is a resident of Australia as well. The officeholders
have to be appointed from the day the company operation is commenced.
Step 5: A written form of consent has to be kept in the records of the company from the officeholders
like director, secretary and member. There are certain criteria that have to be met by the people to
hold position in the office. The office address of the company has to be registered as well.
Step 6: The company can be registered by three methods
 First the owner can directly register with the Australian government by asking for
Australian Business number (ABN).
 Second the accountant or solicitor or anyone else can register the government on
behalf of the government online through ASIC.
 Thirdly by registering directly with ASIC by using form 21. Once the application is
being launched an ABN is going to be provided and certificate of registration is going
to be issued (Abbott and Ma 2017).
Step 7: Once the registration is complete the ACN or ABN number has to be displayed in all
necessary placed.
Justification
Corporation Act 2001 Section 117 (1) & (2)
The section 117 has 2 parts. The first part of section 117 makes it mandatory for an
organisation to register under ASIC. The second part discusses with the method of making
the application. This section justifies the information that has been provided in the earlier
section (Asic 2018). The type of information that has been made mandatory involves the
name of the company, address of the company, consent forms duly signed by required
designation etc as mentioned before.
Corporation act 2001 section 112 (1) & (2)
Section 12 of the corporation act 2001 discusses different types of company. Section one
divides the company primarily in two types the proprietary limited and the public limited.
The limitations are further divided in parts like Limited by shares, unlimited with share
capital, limited by guarantee and lastly No liability company. This section makes the
provision for the no liability company which has to be limited by shares and public limited.
Part 2 of this section discusses the characteristics of the no liability company which has been
discussed in the step 1 of the company formation. (Financialservices 2018).
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Corporation act section 201 A
This section mentions the number of directors and their place of residence mentioned in the
fourth step of company formation.
Corporation act 2001 204 A
The number of secretaries has been mentioned in this section of the legislation discussed in
the fourth step of company formation.
Corporation act 2001 147, 148, 149
The section 147, 148 and 149 provides information regarding the selection of name of the
company. It gives the information regarding the use of ACN number and also makes specific
information regarding the use of NL for no liability company (Kent 2011). This is mentioned
in the step 2 of the steps of company formation.
Part 2
What is a royal commission- how a royal commission is set up- under what act is it set
up.
The royal commission is an ad hoc yet formal place for public inquiry which deals with some
particular issues. This commission takes into consideration in controversial issue. The royal
commission act 1902 (Cth) created the royal commission.
What are the powers of a royal commission?
The chief power of the royal commission is the hearing and the coercive power. It can make
investigation and conduct public hearing. It can punish by issuing fines and event through
arrests.
What is the full (correct) name of the banking royal commission?
Royal commission into misconduct in the banking, superannuation and financial services
industry
When was the banking royal commission established?
Banking Royal society was established in 2017
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Who created the banking royal commission?
Australian government
Who is the banking royal commission commissioner?
The Honourable Justice Kenneth Madison Hayne
When must the banking royal commission report?
Governor General
How many terms of reference have been given to the banking royal commission?
3 terms of reference has been given to the banking royal commission
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Reference List
Abbott, M. and Ma, X., 2017. Economic regulation in Australia: The case of the New South
Wales gas. Economic Papers: A journal of applied economics and policy, 36(3), pp.250-265.
Asic (2018). Steps to register a company | ASIC - Australian Securities and Investments
Commission. [online] Asic.gov.au. Available at: https://asic.gov.au/for-business/registering-
a-company/steps-to-register-a-company/ [Accessed 15 Sep. 2018].
Financialservices (2018). [online] Financialservices.royalcommission.gov.au. Available at:
https://financialservices.royalcommission.gov.au/Documents/Signed-Letters-Patent-
Financial-Services-Royal-Commission.pdf [Accessed 15 Sep. 2018].
Frost, G.R., 2007. The introduction of mandatory environmental reporting guidelines:
Australian evidence. Abacus, 43(2), pp.190-216.
Ireland, P., 2010. Limited liability, shareholder rights and the problem of corporate
irresponsibility. Cambridge Journal of Economics, 34(5), pp.837-856.
Kent, C.J., 2011. Two depressions, one banking collapse: Lessons from Australia. Journal of
Financial Stability, 7(3), pp.126-137.
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