Limited Liability Act 1855

The Limited Liability Act 1855 (18 & 19 Vict c 133) was an Act of the Parliament of the United Kingdom that first allowed limited liability for corporations that could be established by the general public in the UK.[1]

Limited Liability Act 1855
Citation18 & 19 Vic. c. 133
Dates
Royal assent14 August 1855
Status: Repealed
Text of statute as originally enacted

Overview

Under the Act, shareholders were still liable directly to creditors, for the unpaid portion of their shares. The modern principle that shareholders are liable to the corporation was introduced by the Joint Stock Companies Act 1844.

The 1855 Act allowed limited liability to companies of more than 25 members (shareholders). Insurance companies were excluded from the act, though it was standard practice for insurance contracts to exclude action against individual members. Limited liability for insurance companies was allowed by the Companies Act 1862.

Debate

In the House of Lords, a considerable amount of opposition existed to the idea that companies should have the advantage of limited liability. Many peers objected to what appeared to them as the government rushing through the bill as if its urgency was connected to the effort in the Crimean War. Earl Grey was one of these. He said,[2]

It proposes to depart from the old-established maxim that all the partners are individually liable for the whole of the debts of the concern.

Earl Granville replied to these concerns as follows.[3]

it appears to me that a time of war is the very time which you ought to free commerce from restrictions, and, therefore that the reason he mentioned is an especial reason for pressing on the Bill instead of retarding it.

See also

Bibliography
  • Harris, R. (2000). Industrialising English Law: Entrepreneurship and Business Organisation, 1720–1844. Cambridge, UK: Cambridge University Press. ISBN 0-521-66275-3.
  • Hunt, B.C. (1936). The Development of the Business Corporation in England, 1800–1867. Cambridge, MA: Harvard University Press.
  • Mayson, S.W; et al. (2005). Mayson, French & Ryan on Company Law. London: Oxford University Press. ISBN 0-19-928531-4.
  • Amsler, C.F.; et al. (1981). "Thoughts of some British economists on early limited liability and corporate legislation". History of Political Economy. 13: 774–93. doi:10.1215/00182702-13-4-774.

Notes
  1. Mayson, French and Ryan (2005) 55
  2. HL Debs, vol ? col 1904 (7 August 1855)
  3. HL Debs, vol ?, col 1903 (7 August 1855)

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