Members = possible to have company without share capital ie.

guaranteed company
NOT shareholders since C.A. 2006 refers them
REALLY we will deal with shareholders since mostly not guaranteed
companies
Lecture 1b
2008/09 Corporate Finance Focus Paper NOT APPLICABLE
Emergence of Unincorporated Associations
Trade Associations people fall together akin to cartel group
which could demand certain price control over geographic regions
Emergence of these unincorporated NO legal status BUT did ask
for Crown favour in return for revenue
Crown granted monopolies in return for taxes collected
Beginning of group of people with common goals
ALSO Crown recognition of some bodies which Crown felt that
needed some legal status received Crown Patronage ie. town,
guilds, Universities
o Once members die did NOT want association to die life of
entity had to go on BEYOND members feature today seen in
companies seen as perpetual succession
Concession Theory recognize sometimes companies have
concession to state state gives right (state could have on its own)
BUT state gives up this right privatize granted concession Emergence of Chartered Corporations

Royal Charters ensures that attached to patronage is rights to

monopoly ie. trade in salt right given to particular company
Famous ie East India Co., Virginia Co., Mississippi Co.,
East India Co. colonial need to explore and contract NOT only
trade BUT also involved a lot of political influence military conquest
as well
o Charter was trading East of Cape of Good Hope anything
beyond was within control of East India Co.
o Religious connotations in company + political in that need to
cater to make sure that spices, jewelry seeding of territory,
Crown rulers need to have military conquest o With native armies exceeded numbers of British army
numbers of the time
NOW similar with Huge Multinationals that have more than trade
interest as heart ie. need to control/have monopoly get there first
discover natural resource ie. African continent Growth of Unincorporated Associations

South Sea bubble magnitude of crash overshadows the Enrons

of today
NOTHING to stop U.A. from creation left to do trades that were
outside Royal Charter
South Sea Company was such a company which managed to get Royal
Charter
ONLY 1 ship able to get through
Bubble cards sold many investors NO ONE knew that had
difficulties in S. Sea that only 1 ship able to get through many
thought that would have great return
Money Raised was so much Company took on public government
debt interest of investors goes even farther therefore even MORE
willing to invest in company
SIGN. Development sensed bad news Crown with government
Bubble Act 1719
o Lasted for over 100 years restrictive statute
o Trying to protect S. Sea company
o Restrictive in that if you were raising company from investors
NEED to have Royal Charter THIS cripples investment
OTHERWISE cannot raise money from investors
o 3 years later the Bubble Burst
News came through that things not so good fact that no money being
made directors invested in ships being attacked losing assets
trickled through
o Directors/Promoters ended up in Tower of London -

Emergence of Registered Companies

Above act repealed

Progressive act Joint Stock Companies Act 1844
William Gladstone Chaired commission whose purpose was to
o Necessary for the companies to have some legal form
o Giving legal personality independent of Crown
Basically upon registration NO need to have Royal Charter upon
registration CAN have formation of company Companies House
group of people to register and form their company concept of
limited liability NOT yet
o Essentially liability of members is limited to amount that they
invest NOT here yet since group of people partnership
persisted
o Idea was that IF you put in money and some others invest in
risky venture plus borrow EACH liable for that whole sum

o Joint and severally Grant of Limited Liability

Limited Liability Act 1855

Here concept enshrined in statute as opposed to real

corporate personality which arose through tradition and case
law
o Plc
o NOT all in Parliament approved stiff debate and resistance
Joint Stock Companies Act 1856
o Landmark act FIRST time possible to register a company
(could do before) BUT also possible to marry it with limited
liability NO need for Royal Charter
o Restriction HAD to be at least 7 people NOW can have
single member (until very recently)
o

Proliferation of Company Law

Couple of Companies Acts prior to 1960s
1948 Act quick to adopt foundations found in many jurisdictions
from colonies ALSO act which fleshed out directors responsibilities
o People learned from South Seas Act unfettered power cause
disaster found that this Act provides (Ss. 1(6)(8) director
removed from simple majority persists today!!!
o Lead towards EC
1968 First Council Directive in EC
o
1998 UK Government announces plans to reform company law
o