Business Organisation Law Assignment, Semester 1, University Name

This assignment addresses key aspects of business organization law, beginning with an overview of Queensland Nickel Pty Ltd's corporate structure as a proprietary limited company and its subsequent liquidation, highlighting director liability under the Corporations Act 2001 (Cth). It then differentiates between proprietary companies (limited by shares or unlimited) and subsidiary/holding company relationships. The assignment also explores no-liability companies and their unique characteristics within the mining industry. Furthermore, it analyzes the sole trader business model, discussing its structure, liability, and regulatory compliance. The assignment also provides details on cooperatives and their regulatory framework under the Cooperatives Act 1997 (Cth). Finally, the assignment examines the process of director removal, particularly in public limited companies, and the balance of power between directors and shareholders, including the rights of directors to present their case before removal.

Running head: LAW OF BUSINESS ORGANISATION
Law of Business Organisation
Name of the Student
Name of the University
Author Note

1LAW OF BUSINESS ORGANISATION
A.
Queensland Nickel Pty Ltd has been incorporated as a proprietary limited company, which
is evident from the suffix Pty Ltd attached to the name of the company. It has been registered
in July of the year 1971. QNI Resources Ltd and QNI Metals Ltd has started as a joint
venture, which has been controlled by the Queensland Nickel Pty Ltd. However, the company
went to liquidation and the director was liable for insolvent trading u/s 588G of the
Corporations Act 2001 (Cth). This is because the company has been formed u/s 45A of the
Corporations Act 2001 (Cth)1. A proprietary company can be either limited by shares or it
may be an unlimited company2.
Subsidiary company depicts a company that has been controlled and owned by another
company and the control of the first company lies with the latter. The company, which has
been holding the subsidiary company, or has been responsible for the control and regulation
of the subsidiary company, needs to be referred to as the holding company. In this
arrangement, the holding company can hold the shares of the subsidiary company but the
subsidiary company does not hold the shares in the holding company. A subsidiary company
is required to be treated as the assets of the holding company and all the assets of the
subsidiary company is required to be treated as the asset of the holding company3.
For the purpose of registering the proprietary company, it needs to be incorporated u/s
45A of the Corporations Act 20014. Any company that has been incorporated in any other
forms previously may also be considered as proprietary company owing to a conversion that
has been effected with respect to that company under this section. The creation of a
1 The Corporations Act 2001 (Cth), s 45A
2 Bottomley, Stephen. The constitutional corporation: Rethinking corporate governance. (Routledge, 2016).
3 Hansmann, Henry, and Reinier Kraakman. "The end of history for corporate law." (2017) Corporate
Governance. Gower. 49-78.
4 Ibid

2LAW OF BUSINESS ORGANISATION
proprietary company requires a maximum of fifty shareholders. Again, for the purpose of
limit regarding the number of shareholders, the shareholders who are employees and the CSF
offers shareholders are not to be regarded. It is not required to ensure any disclosure to the
investors under the chapter 6D5.
The NL company depicts the no-liability company that has been registered under the
Corporations Act 2001 (Cth)6. This form of company needs to declare in its objects that the
company has been incorporated and indulged as a mining company. These companies are not
to be permitted to make calls for the issue price of unpaid shares. Such companies are
generally concerned with the mining industry and it needs its activities to be restricted to the
same7.
The rules and compliances that have been inserted in the Corporations Act 2001 (Cth)8 for
the regulation of the companies are also to be imposed upon the no-liability company. This
form of companies needs to adopt a constitution where it needs to declare its object to be a
mining company and being indulged with the mining industry. In case of no-liability
companies, the shareholders not to be conferred with the liability to make payment calls with
respect to unpaid shares9. In this form of company, the purchase of the shares is to be treated
as traditional contracts, which are biding upon the parties. In case of the call, the shareholders
can refuse to pay. They are entitled to forfeit both the paid as well as unpaid shares. This
makes people to invest in risky ventures such as mining. In certain cases, the mining
companies are converted into limited liability company, when it seems potentially beneficial
for the company to pursue such a conversion10.
5 The Corporations Act 2001 (Cth)
6 ibid
7 Miglani, Seema, Kamran Ahmed, and Darren Henry. "Voluntary corporate governance structure and financial
distress: Evidence from Australia." Journal of Contemporary Accounting & Economics 11.1 (2015): 18-30.
8 The Corporations Act 2001 (Cth)
9 Hutchinson, Marion, Michael Seamer, and Larelle Ellie Chapple. "Institutional investors, risk/performance and
corporate governance." The International Journal of Accounting 50.1 (2015): 31-52.
10 Gilligan, George, et al. "Understanding penalties regimes for corporate wrongdoing in Australia and
implications for the teaching of corporate law." Corporate Law Teachers Association Conference 2015.

3LAW OF BUSINESS ORGANISATION
B.
Sole trader depicts the businesses that are established by an individual. In this form of
business, the individual who has been running the business is liable for all the liabilities that
have been incurred in the course of running the business. This structure of business involves
the whole business to be carried out and run by the individual and anything that accrues under
the business name needs to be considered to accrue to the person running the business.
Moreover, the profits of the business are also required to be accrued to the trader carrying out
the business and all the incomes arising from the business are to be treated to be included in
taxable income of the trader who has been running the business. This form of business does
not require the business to comply with complicated compliances. Even the licensing and
permits does not require strict adherence. The laws that regulate the sole traders are multiple
in number and the same are concerned with interaction of the business with other individuals
and entities. This includes the interaction of the business with its customer and clients and the
same is governed by the Fair Trading Act 1989 (Qld)11. This form of business is easy to set
up and require less compliance with the regulations. Moreover, it does not need strict
documentations. The disclosure requirements, in this form of business, are also not very
stringent12.
The cooperative depicts a form of business structure where an association of individuals
acting in an autonomous nature. In this form of business, the associated individuals unite in a
voluntary manner to achieve the common social, cultural and economic requirements and
objectives. The enterprise under this form of business structure needs to be jointly owned as
well as democratically controlled by the individuals associated with the enterprise. The
management of this form of company lies with the association of the individuals who owns
Corporate Law Teachers Association, 2015.
11 The Fair Trading Act 1989 (Qld)
12 Potts, Conor, and Alireza Nazarian. "Small businesses and graduate recruitment in Australia and the United
Kingdom." International Journal of Business and Social Science 6.8 (2015): 61-69.

4LAW OF BUSINESS ORGANISATION
the enterprise13. The management of the enterprise is carried out by the people who are also
working within the enterprise. The cooperatives in the Queensland are to be regulated by the
Cooperatives Act 1997 (Cth)14. For the purpose of registering a cooperative business the
provisions contained in s 19 of the Cooperatives Act 1997 (Cth)15.
C.
The removal of the directors from the office as to be effected by the shareholders attracts
concerns in many situations where there are certain anomalies cropping up within the
management and the owners of the company. This needs to be assessed as a governance
issue. There is a balance of power among the directors and shareholders of the company. The
shareholders belonging to public limited company are conferred with the authority to effect a
removal of a director by passing an ordinary resolution u/s 203D of the Corporations Act
2001 (Cth)16. However, any director who has been under the apprehension of being removed
by the shareholders of the company under s 203D of the Corporations Act 2001 (Cth)17 has
been conferred with immunity under the same to combat the situation. Under the provisions
of this section, the directors are to circulate the statement among the shareholders containing
their justification that would render their removal to be unjust. The directors are also
conferred with the authority to present their side in the meeting considering their removal of
the directors. The director needs to be given a chance of being heard in the meeting that has
been held for their removal from the designation of a director. Moreover, it has been decreed
by the courts that the directors of a company needs to be removed in accordance with the
constitution of the company in case the company has a constitution of its own and the same
provides for a process that would be followed for the removal of a director. Any removal of
13 McKillop, Donal G., and John OS Wilson. "Credit unions as cooperative institutions: Distinctiveness,
performance and prospects." Social and Environmental Accountability Journal 35.2 (2015): 96-112.
14 The Cooperatives Act 1997 (Cth)
15 The Cooperatives Act 1997 (Cth), s 19
16 The Corporations Act 2001 (Cth), 203D
17 ibid

5LAW OF BUSINESS ORGANISATION
the directors that has been carried out in contravention of the constitution would be required
to be treated as invalid. This would held a balance to be powers that has been conferred upon
the directors of a company and the shareholders of that company. This in turn would prevent
the unethical use of powers by the directors as well as the oppressive removal of the directors
by the shareholders18. There is a balance of power among the directors and shareholders of
the company. This is because as the directors are to be removed by the shareholders in case of
discrepancies gain they have been provided immunity from the same by the chance of
presenting their side.
18 Bottomley, Stephen. The constitutional corporation: Rethinking corporate governance. Routledge, 2016.

6LAW OF BUSINESS ORGANISATION
Bibliography
Bottomley, Stephen. The constitutional corporation: Rethinking corporate governance.
(Routledge, 2016).
Gilligan, George, et al. "Understanding penalties regimes for corporate wrongdoing in
Australia and implications for the teaching of corporate law." Corporate Law Teachers
Association Conference 2015. Corporate Law Teachers Association, 2015.
Hansmann, Henry, and Reinier Kraakman. "The end of history for corporate law." (2017)
Corporate Governance. Gower. 49-78.
Hutchinson, Marion, Michael Seamer, and Larelle Ellie Chapple. "Institutional investors,
risk/performance and corporate governance." The International Journal of Accounting 50.1
(2015): 31-52.
McKillop, Donal G., and John OS Wilson. "Credit unions as cooperative institutions:
Distinctiveness, performance and prospects." Social and Environmental Accountability
Journal 35.2 (2015): 96-112.
Miglani, Seema, Kamran Ahmed, and Darren Henry. "Voluntary corporate governance
structure and financial distress: Evidence from Australia." Journal of Contemporary
Accounting & Economics 11.1 (2015): 18-30.
Potts, Conor, and Alireza Nazarian. "Small businesses and graduate recruitment in Australia
and the United Kingdom." International Journal of Business and Social Science 6.8 (2015):
61-69.
The Corporations Act 2001 (Cth), s 45A

7LAW OF BUSINESS ORGANISATION
The Fair Trading Act 1989 (Qld)