Share ownership and the introduction of no liability legislation in nineteenth-century Australia

Abstract

The no liability company – where investors are not liable for uncalled parts of their shares – is unique to Australasia. Deploying a large dataset, we provide the first empirical examination of the effects of this new corporate type on company formation and shareholding. Victorian gold mining was the earliest and most pervasive user of no liability. No liability companies largely replaced limited liability within a decade of the legislation in 1871, which was more rapid than the transition from unlimited to limited liability companies in several other nations. No liability firms attracted a broader range of investors, geographically beyond the mining districts, and amongst occupations most conscious of their benefits, especially gentlemen and financiers who believed they were less risky because of the removal of call liabilities and the mitigation of previous regulatory failures. No liability was a response to the high risks of gold mining in an itinerant early settler society.