Limited Liability Act 1855
Encyclopedia
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 corporation
s that could be established by the general public in the UK.
s were still liable directly to creditor
s, for the unpaid portion of their share
s. 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
.
. Earl Grey
was one of these. He said,
Earl Granville
replied to these concerns as follows.
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
of the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
that first allowed limited liability
Limited liability
Limited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
for corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s that could be established by the general public in the UK.
Overview
Under the Act, shareholderShareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s were still liable directly to creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s, for the unpaid portion of their share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
s. The modern principle that shareholders are liable to the corporation was introduced by the Joint Stock Companies Act 1844
Joint Stock Companies Act 1844
The Joint Stock Companies Act 1844 was an Act of the Parliament of the United Kingdom that expanded access to the incorporation of joint-stock companies....
.
The 1855 Act allowed limited liability to companies of more than 25 members (shareholders). Insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
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
Companies Act 1862
The Companies Act 1862 was an Act of the Parliament of the United Kingdom regulating UK company law, whose descendant is the Companies Act 2006.-Provisions:...
.
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 WarCrimean War
The Crimean War was a conflict fought between the Russian Empire and an alliance of the French Empire, the British Empire, the Ottoman Empire, and the Kingdom of Sardinia. The war was part of a long-running contest between the major European powers for influence over territories of the declining...
. Earl Grey
Henry Grey, 3rd Earl Grey
Henry George Grey, 3rd Earl Grey , known as Viscount Howick from 1807 until 1845, was an English statesman.-Background:Grey was the eldest son of Prime Minister Charles Grey, 2nd Earl Grey, by his wife the Hon...
was one of these. He said,
Earl Granville
Granville Leveson-Gower, 2nd Earl Granville
Granville George Leveson Gower, 2nd Earl Granville KG, PC FRS , styled Lord Leveson until 1846, was a British Liberal statesman...
replied to these concerns as follows.
See also
- Companies Acts
- Companies Act 2006Companies Act 2006The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
- Joint Stock Companies Act 1844Joint Stock Companies Act 1844The Joint Stock Companies Act 1844 was an Act of the Parliament of the United Kingdom that expanded access to the incorporation of joint-stock companies....
- Joint Stock Companies Act 1856Joint Stock Companies Act 1856The Joint Stock Companies Act 1856 was a consolidating statute, recognised as the founding piece of modern United Kingdom company law legislation.-Overview:...
- Utopia Limited