| Short Title: | Limited Liability Act 1855[1] |
| Type: | Act |
| Parliament: | Parliament of the United Kingdom |
| Long Title: | An Act for limiting the Liability of Members of certain Joint Stock Companies. |
| Year: | 1855 |
| Royal Assent: | 14 August 1855 |
| Repeal Date: | 11 August 1875 |
| Amendments: | Joint Stock Companies Act 1856 |
| Repealing Legislation: | Statute Law Revision Act 1875 |
| Status: | Repealed |
| Original Text: | http://www.legislation.gov.uk/ukpga/Vict/18-19/133/contents/enacted |
| Statute Book Chapter: | 18 & 19 Vict. c. 133 |
The Limited Liability Act 1855 (18 & 19 Vict. c. 133) was an act of the Parliament of the United Kingdom that first expressly allowed limited liability for corporations that could be established by the general public in England and Wales as well as Ireland.[2] The Act did not apply to Scotland,[3] where the limited liability of shareholders for the debts company debts had been recognised since the mid-Eighteenth century with the decision in the case of Stevenson v McNair.[4] Although the validity of the decision in that case had come to be doubted by the mid-Nineteenth century,[5] the Joint Stock Companies Act 1856 - which applied across the UK - put the matter beyond doubt, settling that Scottish 'companies' could be possessed of both separate legal personality and limited liability.
Under the Act, shareholders were still liable directly to creditors, for the unpaid portion of their shares. The modern principle that shareholders are liable to the corporation was introduced by the Joint Stock Companies Act 1844.
The 1855 Act allowed limited liability to companies of more than 25 members (shareholders). Insurance companies were excluded from the act, though it was standard practice for insurance contracts to exclude action against individual members. Limited liability for insurance companies was allowed by the Companies Act 1862.
In the House of Lords, a considerable amount of opposition existed to the idea that companies should have the advantage of limited liability. Many peers objected to what appeared to them as the government rushing through the bill as if its urgency was connected to the effort in the Crimean War. Earl Grey was one of these. He said,[6]
Earl Granville replied to these concerns as follows.[7]