Government agency

At around the same time as the above events were occurring in the United States, British legislation was similarly freeing the corporation from the shackles of historical restrictions. In 1844 British Parliament passed the Joint Stock Companies Act, which allowed companies to incorporate without a royal charter or an additional act of Parliament. Ten years later, England enshrined into law the preeminent hallmark of modern corporate law - the concept of limited liability. Acting in response to increasing pressure from newly emerging capital interests, Parliament passed the Limited Liability Act of 1855, which established the principle that any corporation could enjoy limited legal liability on both contract and tort claims simply by registering as a "limited" company with the appropriate government agency.

This revolutionary switch from unlimited to limited liability prompted a writer for the English periodical Economist to write in 1855 that "never, perhaps, was a change so vehemently and generally demanded, of which the importance was so much overrated." The glaring inaccuracy of the second part of this judgment was recognized by the same magazine more than seventy-five years later, when it claimed that, "[t]he economic historian of the future . . . may be inclined to assign to the nameless inventor of the principle of limited liability, as applied to trading corporations, a place of honour with Watt and Stephenson, and other pioneers of the Industrial Revolution