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The introduction of limited liability in nineteenth century England

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  • Paolo Maggioni
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    Abstract

    In this paper I have analysed the development of company law from 1720 through to 1857. During this long period of time, company law assumed the characteristics it has now. At the starting point, company law stood with incorporation granted by the Crown or Parliament on one side and partnership regulated by common law on the other. The development of the modern corporation needed the definition of what were the problems connected to the fact that a firm is run in association and what is the legal framework that allows to solve efficiently with the lowest costs these problems. In this paper I show that the introduction of limited liability gets its meaning from the exact definition of many other aspects of company life, such as bankruptcy procedures, directors’ power and responsibility, shareholders rights, publicity regime for company acts. Accordingly it’s shown that the introduction of the limited liability regime can’t be studied in isolation and it was just the last step in a complex development process.

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    Bibliographic Info

    Paper provided by Public policies and local development in its series Openloc Working Papers with number 1116.

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    Date of creation: 2011
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    Handle: RePEc:trn:utwpol:1116

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    Keywords: Corporation and Securities Law;

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    1. Patterson, Margaret & Reiffen, David, 1990. "The Effect of the Bubble Act on the Market for Joint Stock Shares," The Journal of Economic History, Cambridge University Press, vol. 50(01), pages 163-171, March.
    2. Graeme G. Acheson & John D. Turner, 2006. "The impact of limited liability on ownership and control: Irish banking, 1877-1914 -super-1," Economic History Review, Economic History Society, vol. 59(2), pages 320-346, 05.
    3. Garber, Peter M, 1990. "Famous First Bubbles," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 35-54, Spring.
    4. Winton, Andrew, 1993. " Limitation of Liability and the Ownership Structure of the Firm," Journal of Finance, American Finance Association, vol. 48(2), pages 487-512, June.
    5. Hickson, Charles R. & Turner, John D., 2003. "Shareholder liability regimes in nineteenth-century English banking: The impact upon the market for shares," European Review of Economic History, Cambridge University Press, vol. 7(01), pages 99-125, April.
    6. Christine E. Amsler & Robin L. Bartlett & Craig J. Bolton, 1981. "Thoughts of Some British Economists on Early Limited Liability and Corporate Legislation," History of Political Economy, Duke University Press, vol. 13(4), pages 774-793, Winter.
    7. Mark I. Weinstein, 2003. "Share Price Changes and the Arrival of Limited Liability in California," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 1-25, 01.
    8. Michael Smart, 1996. "On limited liability and the development of capital markets: An historical analysis," Working Papers msmart-96-02, University of Toronto, Department of Economics.
    9. Hickson, Charles R. & Turner, John D. & McCann, Claire, 2005. "Much ado about nothing: the limitation of liability and the market for 19th century Irish bank stock," Explorations in Economic History, Elsevier, vol. 42(3), pages 459-476, July.
    10. Carr, Jack L & Mathewson, G Frank, 1988. "Unlimited Liability as a Barrier to Entry," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 766-84, August.
    11. Forbes, Kevin F, 1986. "Limited Liability and the Development of the Business Corporation," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(1), pages 163-77, Spring.
    12. Grossman, Peter Z, 1995. "The Market for Shares of Companies with Unlimited Liability: The Case of American Express," The Journal of Legal Studies, University of Chicago Press, vol. 24(1), pages 63-85, January.
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