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AM IV Company Law

The history of company law in the UK began with developments in the 18th and 19th centuries to facilitate business activity during the Industrial Revolution. The Joint Stock Companies Act 1844 made it possible to incorporate through a simple registration, establishing companies as separate legal entities, while the Limited Liability Act 1855 allowed investors to limit their liability. These acts established the fundamental features of modern company law. Over the 20th century, companies became the dominant form of economic organization in the UK, raising concerns about accountability. Reforms focused on mechanisms like auditing, separation of CEO/chair positions, and remuneration committees to place checks on executive pay for listed companies. EU integration also brought harmonization of company law through Directives and case law

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88 views2 pages

AM IV Company Law

The history of company law in the UK began with developments in the 18th and 19th centuries to facilitate business activity during the Industrial Revolution. The Joint Stock Companies Act 1844 made it possible to incorporate through a simple registration, establishing companies as separate legal entities, while the Limited Liability Act 1855 allowed investors to limit their liability. These acts established the fundamental features of modern company law. Over the 20th century, companies became the dominant form of economic organization in the UK, raising concerns about accountability. Reforms focused on mechanisms like auditing, separation of CEO/chair positions, and remuneration committees to place checks on executive pay for listed companies. EU integration also brought harmonization of company law through Directives and case law

Uploaded by

Ridhima Purwar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name – Nayan Grover

PRN: 19010224151

Division – C

AM- 4 Company Law

History of Company Legislation of UK.

The history of company law in the United Kingdom concerns the change and development
in UK company law within the context of the history of companies, deriving from its
predecessors in Roman and English law. Company law in its current form dates from the
mid-nineteenth century, however other forms of business association developed long before.

By the1820s the Industrial Revolution had gathered pace, pressing for legal change to


facilitate business activity. Restrictions were gradually lifted on ordinary people
incorporating until, under the Joint Stock Companies Act 1844, it was possible through a
simple registration procedure to incorporate. The advantage of establishing a company as
a separate legal person was mainly administrative, as a unified entity under which the rights
and duties of all investors and managers could be channeled. The most important
development, was the Limited Liability Act 1855, which allowed investors to limit their
liability in the event of business failure to the amount they invested in the company. These
two features – (1) a simple registration procedure and (2) limited liability – were
subsequently codified in the first modern company law Act, the Joint Stock Companies Act
1856. A series of Companies Acts up to the present Companies Act 2006 have essentially
retained the same fundamental features.

Over the twentieth century, companies in the UK became the dominant organisational form
of economic activity, which raised concerns about how accountable those who controlled
companies were to those who invested in them. The first reforms following the Great
Depression, in the Companies Act 1948, ensured that directors could be removed by
shareholders with a simple majority vote. In 1977, the government's Bullock Report proposed
reform to allow employees to participate in selecting the board of directors, as was happening
in across Europe, exemplified by the German Codetermination Act 1976. However, the UK
never implemented the reforms, and from 1979 the debate shifted. Through the 1990s the
focus in corporate governance turned toward internal control mechanisms, such as auditing,
separation of the chief executive position from the chair, and remuneration committees to
place some check on excessive executive pay. These rules applicable to listed companies,
now found in the UK Corporate Governance Code, have been complemented principles based
regulation of institutional investors activity in company affairs. The UK's integration in
the European Union meant a steadily growing body of EU Directives and case law to
harmonise company law within the internal market.

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