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Shareholder Democracies?Corporate Governance in Britain and Ireland before 1850$
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Mark Freeman, Robin Pearson, and James Taylor

Print publication date: 2011

Print ISBN-13: 9780226261874

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226261881.001.0001

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Limited Liability and Company Dissolution

Limited Liability and Company Dissolution

Chapter:
(p.179) Chapter Seven Limited Liability and Company Dissolution
Source:
Shareholder Democracies?
Author(s):

Mark Freeman

Robin Pearson

James Taylor

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226261881.003.0007

This chapter considers the ways in which companies sought to safeguard the “financial” interests of their investors, which were coming to predominate as the joint-stock economy and the secondary market for shares grew. In particular, it examines the issue of shareholder liability, which exercised legislators, political commentators, company promoters, and individual shareholders. Although clumsy methods of shareholder protection could be resorted to by insurance companies, these are more suitable in some sectors than in others. Alternative protective mechanisms required transparent governance, which was often noticeably absent in banking. Greater oversight of company affairs is not only increasingly necessary but also increasingly difficult as the number and size of joint-stock companies grew. The chapter concludes that fundamental governance failures in unincorporated companies undermined the potential benefits of unlimited liability and thus strengthened the arguments for general limited liability.

Keywords:   company dissolution, joint-stock economy, secondary market, shareholder protection

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