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The Limited Liability Act 1855 (18 & 19 Vict c 133) was an Act of the
Parliament of the United Kingdom The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative suprem ...
that first expressly allowed
limited liability Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...
for
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
s that could be established by the general public in England and Wales as well as Ireland. The Act did not apply to Scotland, where the limited liability of shareholders for the debts company debts had been recognised since the mid-Eighteenth century with the decision in the case of ''Stevenson v McNair''. Although the validity of the decision in that case had come to be doubted by the mid-Nineteenth century, the
Joint Stock Companies Act 1856 The Joint Stock Companies Act 1856 (19 & 20 Vict c 47) was an Act of the Parliament of the United Kingdom. It was a consolidating statute, recognised as the founding piece of modern United Kingdom company law legislation. Overview Unlike other ...
– which applied across the UK – put the matter beyond doubt, settling that Scottish 'companies' could be possessed of both separate legal personality and limited liability.


Overview

Under the Act,
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal o ...
s were still liable directly to
creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on 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 ...
s, 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 Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
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 The Crimean War, , was fought from October 1853 to February 1856 between Russia and an ultimately victorious alliance of the Ottoman Empire, France, the United Kingdom and Piedmont-Sardinia. Geopolitical causes of the war included the ...
. Earl Grey was one of these. He said, Earl Granville replied to these concerns as follows.HL Debs, vol ?, col 1903 (7 August 1855)


See also

*
Companies Act Companies Act (with its variations) is a stock short title used for legislation in Botswana, Hong Kong, India, Kenya, Malaysia, New Zealand, South Africa and the United Kingdom in relation to company law. The Bill for an Act with this short title ...
*
Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...
* Joint Stock Companies Act 1844 *
Joint Stock Companies Act 1856 The Joint Stock Companies Act 1856 (19 & 20 Vict c 47) was an Act of the Parliament of the United Kingdom. It was a consolidating statute, recognised as the founding piece of modern United Kingdom company law legislation. Overview Unlike other ...
*'' Utopia, Limited''


Bibliography

*Gibbons, David
The Limited Liability Act, 18th & 19th Victoria, Cap. 133.
John Weale. High Holborn, London. 1855. *Paterson, W (ed). "Limited Liability Act". The Practical Statutes of the Session 1855. John Crockford. Essex Street, Strand, London. Page
556
to 570. * * * *


Notes

http://hansard.millbanksystems.com/lords/1855/aug/07/limited-liability-bill#S3V0139P0_18550807_HOL_4 {{UK legislation Public liability United Kingdom Acts of Parliament 1855 History of corporate law United Kingdom company law