Transplanting Company Law: Shareholder Protection in the Cape Colony

In this paper, we examine the transplantation of British company law into the Cape Colony in the late nineteenth century. The Cape Colony Companies Act of 1892 was like its British counterpart in that it provided minimal investor protection. This meant that promoters were free to choose the level and types of shareholder safeguards in their company’s articles of association. We analyse the shareholder protection offered in the articles of Cape Colony companies established in the decade after 1892. We find that Cape companies offered higher protection than British ones. They were also much more likely to adopt the gold-standard blueprint articles of association from the Act’s appendix. We find that companies adopting these blueprint articles had more diffuse ownership but lower survival rates, suggesting trade-offs between investor protection and corporate longevity in the Cape Colony.