ABSTRACT
Between the mid-1850s and the mid-1880s, following the liberalization of company law, a substantial number of limited companies were established. During the decades after Lowe's Act of 1856, 5,310 such concerns were formed in the United Kingdom, of which by far the greatest number, 4,859, were registered in London. Most attention has been paid to London registrations, 1 because of their dominance, and the analysis in this chapter will be restricted to such concerns. Throughout the 30-year period being considered, there was an upward movement in the secular trend of London registrations, with 6,111 during the period 1866 to 1874 and 9,551 between 1875 and 1883. Not all of these registrations resulted in a company subsequently raising capital and commencing business: 36% of registrations made between 1856 and 1865 were abortive, and 31% during the following decade. In addition, not all of the companies which managed to proceed beyond the registration stage raised capital publicly. Although the private company was not recognized legally until 1900 and not defined legally until 1907, a significant proportion of registrations, even before 1885, were made to establish private companies. Shannon states that 14.5% of registrations which took place between 1875 and 1883 were for private companies, and suggests that the registrations of 1866–1874 ‘contain a fair number of private companies’. 2 It is highly probable that the private company was in existence from the liberalization of company law in 1855/6. Before examining the impact of free incorporation upon the organization and finance of manufacturing industry, this chapter will consist of a general consideration of some of the features of corporate finance. Attention will be paid in particular to, first, the type of shares that the new limited concerns used and, second, the geographical and social composition of the investors who took up the shares. These two aspects are linked because the character and denomination of the issued shares will to a certain extent determine the nature of the investor prepared to subscribe for them.
