Chambers's Journal of Popular Literature, Science, and Art, Fifth Series, No. 37, Vol. I, September 13, 1884

No. 37.—Vol. I.
Price 1½ d.
SATURDAY, SEPTEMBER 13, 1884.
Readers of newspapers must have frequently observed in the advertising columns of most of the daily journals lengthy prospectuses setting forth in roseate terms the why and the wherefore of various public Companies. These prospectuses are published with the view of inducing investors, or those having capital at command, to embark money in the projected undertakings, the majority of which are new ventures, formed, perhaps, to work a tin or silver mine; to manufacture some patented article; to advance money on land and house property; to conduct banking or insurance business; to construct tramways; to rear and sell cattle on some prairie of the Far West; or some other of the hundred-and-one openings that present themselves for commercial dealings. Indeed, there is no end to the variety of objects that may be selected as fitting media for joint-stock enterprise. The titles of the Companies bear the word ‘Limited’ tacked on to them. It is the purpose of this article to explain the meaning of the term, and at the same time give a slight general exposition of the law affecting such joint-stock Companies.
A Company of the nature indicated above is simply an association or partnership entered into by a number of individuals—not fewer than seven—who take shares, not necessarily in equal proportions, in the joint-stock of the concern, the main object being the proportionate division of possible profits. When the joint agreement complies with the obligations laid down by statute, and is registered according to law, the subscribers become a corporation, and their Company has a common seal and ‘perpetual succession,’ to use a legal expression. It is only recently, comparatively speaking, that joint-stock Companies have existed in large numbers. Formerly, the formation of a Company was a difficult and costly operation, as a Royal Charter had to be specially obtained, or an Act of Parliament passed for the purpose. In the year 1844, however, an Act came into force which enabled joint-stock Companies to become incorporated by registering in a particular way, after certain preliminaries had been gone through. Still the manner of proceeding was inconvenient, and something simpler was urgently required. Business men and investors wanted greater facilities for launching joint-stock enterprises, and for the risking of a certain sum of money, and no more, in such concerns, thereby setting a limit to their liability. According to the old law of partnership, each and every member of a corporation or Company was liable to the utmost extent of his means for the liabilities that might have been contracted on behalf of the undertaking. A recent and peculiarly disastrous instance of this occurred in the ruinous downfall of the City of Glasgow Bank, which with its collapse brought beggary to families innumerable, the various shareholders being liable to their last farthing for the enormous load of debt due by the bank at the time of the crash.