ABSTRACT
Prior to the Joint Stock Companies Act 1844,1 the penalties of the Bubble Act would be visited upon businesses which traded freely transferable shares without the permission of a royal charter. Otherwise, business either engaged in the arduous task of gaining incorporation through a private Act of Parliament or operated as an unincorporated association such as a partnership or as a Deed of Settlement company. In statutory companies, a director’s duties were those set out in the incorporating Act. In partnerships, all partners were entitled to manage and owed a duty of utmost trust to the other partners who were all agents for each other and responsible for all the partnership’s activities and debts. In Deed of Settlement companies those who managed the business were trustees who held the title to the company for the beneficiaries, the shareholders. As trustees, they owed a fiduciary duty to the beneficiaries to act with absolute honesty entirely eschewing self-interest in their actions and intentions. Correspondingly, shareholders as beneficial owners had both an interest in the company’s assets and (unless there was an agreement in the deed to the contrary) undertook unlimited liability for the company’s debts.
