LBE Week 1

The principal legal benefits obtained when registering as a limited enterprise are perpetual succession separate legal identity from the incorporators limitation of liabilities can hold property, sue and be sued

Directors have power of management exercised by a boardMembers have some designs reserved to them and they can exercise their power in the general meeting

Joint stock corporations were not incorporated bodies. People would put money in body on contractual basis and expect to reap profit (without limited liability). Need for capital was reason for the joint stock company formation in the first place.The crash of the East boa company lead to the government deciding to prohibit joint stock companies. But nothing linked the crash to the company being unincorporated.Post prohibition there was still a need for capital and an innovation was the 'deed of settlement companies' which relied on the law of trusts. Assets were held by trustee on trust for the investors. Attempts were made in the trust deed to limit the liability of investors but this was not enforceable against third parties (e.g. creditors) because of privity of contract. There was still an admin issue of suing and being sued when undertaking had large number of members.

Part of what drove to limited liability was the attractiveness of north american and continental options that offered limited liability

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