TOPIC 1: CORPORATE PERSONALITY AND INCORPORATION PROCESS CH 1 - CONTEXT, HISTORY AND REGULATIONS - HISTORY OF COMPANY LAW IN AUSTRALIA: British heritage: . As trade began to develop in the 17th century, the law was required to develop solutions to allow for collective investment in enterprises. . The concept of incorporated entity emerged in England as an institutional solution to property ownership. o The law recognised that a position in the church carried perpetual succession (meaning the continuation of a corporation despite death or bankruptcy) as a legal entity that could own property. The common law recognised a form of corporation of a group or association of persons - the corporation aggregate - this was predominantly designed to recognise property ownership by a group of persons . o Important as the first commercial companies came about when groups and merchants were able to petition the monarch direct for a Royal Charter as a corporation aggregate. Prominent examples of charted companies were large foreign trade companies such as East India Company and the Hudson Bay Company. o East India Company was granted Royal Charter in 1600. o It is still possible to have companies established by Royal Charter such as professional bodies like the Institute of Royal Accountants and not for profit organisations such as the British Broadcasting Commission. In the 18th century, the Joint Stock company developed - a mechanism whereby a person could invest a sum of money in a venture in return for an entitlement to share in the profits of the venture - different from a traditional partnership as an investors entitlement was represented by a 'share' which cold be sold by the investor without the consent of other investors. The Bubble Act and its Consequences - o As shares were marketable, this, this created the opportunity for speculation, sparking an investment boom. o In 1970 the joint stock market collapsed, resulting in large losses, and the British Parliament intervened by passing the Bubble Act 1720, making joint stock companies illegal. The deed of settlement - o A new solution found - under this mechanism, a few of the investor partners were appointed trustees of the business on a deed of settlement. o The shares were still transferable - this mechanism was not illegal under the Bubble Act 1720 and continued to flourish. Important legislation: Joint Stock Companies Act 1844 (UK) - the right to incorporate was made generally available, and many of the deed of settlement used this right. The development enabled participants to obtain the benefits of a separate legal personality, but not limited liability. o The first step towards establishing a system of company law based on legislative regulation, rather than common law doctrine. o Purpose of the Act was to protect the public rather than to offer inducements to incorporate limited liability. Limited Liability Act 1855 (UK) - a company could be formed so that the liability of its investors would be limited to the amount they agreed to invest in the