Cayman Islands company law
Cayman Islands company law is codified in the Companies Law and the Limited Liability Companies Law, 2016, to a lesser extent in the Securities and Investment Business Law. The Cayman Islands is a leading Offshore financial centre, financial services forms a significant part of the economy of the Cayman Islands. Accordingly company law forms a much more prominent part of the law of the Cayman Islands than might otherwise be expected. There are broadly two types of company in the Cayman Islands; the first, more prevalent, are companies formed under the Companies Law. Such companies may be formed as ordinary resident companies, ordinary non-resident companies, exempted companies, exempted limited duration companies or special economic zone companies; the second is limited liability companies formed under the Limited Liability Companies Law, 2016. LLCs are a form of hybrid between partnerships. Although they have separate legal personality they do not have share capital, are managed by the majority vote of their members In the Cayman Islands any one or more persons may by subscribing their name to a company memorandum incorporate a company for a lawful purpose.
In practice, companies are invariably formed by professional trust companies rather than members of the public. Under the Companies Law it is possible to register companies as either a company limited by shares or a company limited by guarantee. A company limited by guarantee may be incorporated with a share capital. In practice the vast majority of companies are incorporated as companies limited by shares. Where a company will carry out its business principally outside of the Cayman Islands, it will be registered as an exempt company; this broadly replicates the International Business Company concept from other jurisdictions, except that in relation to exempt companies, there is no tax saving. The main benefit of registering as an exempt company is that exempt companies do not need to file accounts. Exempted companies can be registered as limited duration companies, or as special economic zone companies. Limited duration companies are required to include “LDC” or “Limited Duration Company” in their name, special economic zone companies are required to include “SEZC” or “Special Economic Zone Company” in their name.
In the Cayman Islands company may further be registered as segregated portfolio company. A segregated portfolio company is a company which segregates the assets and liabilities of different classes of shares from each other and from the general assets of the company. All segregated portfolio companies are required to include the designation "SPC" or “Segregated Portfolio Company” in full within their name. In the Cayman Islands a company has separate legal personality from its members ); the liability of the members of a company is limited to their shares or the amount of their guarantee. Directors or officers of a company are not liable for the company's debts except insofar as they may otherwise be liable for their own conduct or actions; the primary circumstances where liability may be imposed upon directors in relation to their acts as directors are where the director is guilty of fraudulent trading or misfeasance, or where the director undertakes personal responsibility or liability for certain actions.
Conversely, the assets of a company are regarded as belonging to the company and not the company's members. In exception circumstances the courts are prepared to "pierce the corporate veil" and treat the assets of the company as belonging to the members, but the circumstances in which this will be done are rare and exceptional; the corporate constitution of a private company registered under the Companies Law consists of the memorandum and articles of association. Companies may adopt the statutory form of Articles set out in Schedule 1 to the Companies Law, but in practice few companies do so; the memorandum and articles of association of a company are filed with the Companies Registry but are not available for public inspection. The memorandum and articles of association can only be amended by a special resolution, which under Cayman Islands law means a two-thirds majority, although this can be increased under the articles of association. Any amendment to the memorandum or articles becomes effective upon the passing of the special resolution.
The company is required to file the special resolution with the Companies Registry, but failure to do so will not affect the effectiveness of the amendment. Once adopted, the memorandum and articles bind the company and each member of the company as if they had been executed by the same under seal; the constitutional documents of an LLC is the LLC agreement. This is much more akin to a partnership agreement than to the memorandum and articles of association of a company; the LLC agreement is not registered with the Companies Registry. The business and affairs of a Cayman Islands company are managed by its board of directors; the board must consist of one or more persons, these may be individuals or companies. Directors owe strict duties of good faith to exercise their powers for a proper purpose and in the best interests of the company; the Companies Law is entirely silent in relation to the position of the directors, the relevant legal principles are all derived from the common law. The members of the company are the owners of the co
Aktiengesellschaft is a German word for a corporation limited by share ownership whose shares may be traded on a stock market. The term is used in Germany and Switzerland, South Tyrol for companies incorporated there, it is used in Luxembourg, although the equivalent French language term Société Anonyme is more common. In the United Kingdom and the United States, the equivalent terms are "limited" and "incorporated", respectively; the German word Aktiengesellschaft is a compound noun made up of two elements: Aktien meaning shares, Gesellschaft meaning company or society. An English translation is thus "share company", or company limited by shares, or joint-stock company. In German the use of the term Aktien for shares is restricted to Aktiengesellschaften. Shares in other types of German companies are called Anteile rather than Aktien. In Germany and Austria, the legal basis of the AG is the German Aktiengesetz or the Austrian Aktiengesetz. Since the German commercial law requires all corporations to specify their legal form in their name, in order to inform the public of the limits on their liability, all German and Austrian stock corporations include Aktiengesellschaft or AG as part of their name as a suffix.
In Switzerland, the Company Limited by Shares is defined in Title Twenty-Six of the Code of Obligations. Article 950 specifies. German AGs have a "two-tiered board" structure, consisting of a supervisory board and a management board; the supervisory board is controlled by shareholders, although employees may have seats, depending on the size of the company. The management board directly runs the company, but its members may be removed by the supervisory board, which determines the management board's compensation; some German AGs have management boards which determine their own remuneration, but that situation is now uncommon. The general meeting is the supreme governing body of a Swiss company limited by shares, it elects the board of the external auditors. The board of directors may appoint and dismiss persons entrusted with managing and representing the company; the equivalent terms in other countries include the following, which mean either "share company/society" or "anonymous company/society".
Denmark – Aktieselskab Estonia – Aktsiaselts Norway – Aksjeselskap Sweden – Aktiebolag Finland – Osakeyhtiö Turkey – Anonim Şirket Argentina, Costa Rica, Peru and other Spanish speaking countries – Sociedad Anónima Portugal – Sociedade Anónima Brazil – Sociedade Anônima Bulgaria – Акционерно дружество, derived directly from the German AG Belgium, Netherlands – Naamloze Vennootschap Belgium, France – Société Anonyme Poland – Spółka akcyjna Italy – Società per Azioni United Kingdom – Public limited company United Kingdom - cymdeithas cyhoeddus cyfyngedig Croatia - dioničko društvo Romania – Societate pe acțiuni or "Societate anonimă" Russia – Публичное акционерное общество Greece - ανώνυμος εταιρεία Hungary – Részvénytársaság Gesellschaft mit beschränkter Haftung Fohlin, Caroline. "Chapter 4: The History of Corporate Ownership and Control in Germany". In Morck, Randall K. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press.
Pp. 223–282. ISBN 0-226-53680-7. E McGaughey,'The Codetermination Bargains: The History of German Corporate and Labour Law' 23 Columbia Journal of European Law 135 Franks, Julian. "Ownership and Control of German Corporations". The Review of Financial Studies. Oxford University Press. 14: 943–977. Doi:10.1093/rfs/14.4.943. JSTOR 2696732. German Stock Corporations Act 1965 translation
A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. In modern-day corporate law, the existence of a joint-stock company is synonymous with incorporation and limited liability. Therefore, joint-stock companies are known as corporations or limited companies; some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and other countries that have adopted its model of company law, they are known as unlimited companies. In the United States, they are known as joint-stock companies. Ownership refers to a large number of privileges; the company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting. The shareholders vote to accept or reject an annual report and audited set of accounts.
Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but, uncommon. The shareholders are liable for any of the company debts that extend beyond the company's ability to pay up to the amount of them. Finding the earliest joint-stock company is a matter of definition; the earliest records of joint stock company can be found in China during the Song Dynasty. Around 1250 in France at Toulouse, 96 shares of the Société des Moulins du Bazacle, or Bazacle Milling Company were traded at a value that depended on the profitability of the mills the society owned, making it the first company of its kind in history; the Swedish company Stora has documented a stock transfer for an eighth of the company as early as 1288. In more recent history, the earliest joint-stock company recognized in England was the Company of Merchant Adventurers to New Lands, chartered in 1553 with 250 shareholders. Muscovy Company, which had a monopoly on trade between Moscow and London, was chartered soon after in 1555.
The much more famous and powerful English East India Company was granted an English Royal Charter by Elizabeth I on December 31, 1600, with the intention of favouring trade privileges in India. The Royal Charter gave the newly created Honourable East India Company a 15-year monopoly on all trade in the East Indies; the Company transformed from a commercial trading venture to one that ruled India and exploited its resources, as it acquired auxiliary governmental and military functions, until its dissolution. Soon afterwards, in 1602, the Dutch East India Company issued shares that were made tradable on the Amsterdam Stock Exchange; that invention enhanced the ability of joint-stock companies to attract capital from investors, as they could now dispose their shares. In 1612, it became the first'corporation' in intercontinental trade with'locked in' capital and limited liability. During the period of colonialism, Europeans the British, trading with the Near East for goods and calico for example, enjoyed spreading the risk of trade over multiple sea voyages.
The joint-stock company became a more viable financial structure than previous guilds or state-regulated companies. The first joint-stock companies to be implemented in the Americas were The London Company and The Plymouth Company. Transferable shares earned positive returns on equity, evidenced by investment in companies like the British East India Company, which used the financing model to manage trade in India. Joint-stock companies paid out divisions to their shareholders by dividing up the profits of the voyage in the proportion of shares held. Divisions were cash, but when working capital was low and detrimental to the survival of the company, divisions were either postponed or paid out in remaining cargo, which could be sold by shareholders for profit. However, in general, incorporation was possible by royal charter or private act, it was limited because of the government's jealous protection of the privileges and advantages thereby granted; as a result of the rapid expansion of capital-intensive enterprises in the course of the Industrial Revolution in Britain, many businesses came to be operated as unincorporated associations or extended partnerships, with large numbers of members.
Membership of such associations was for a short term so their nature was changing. Registration and incorporation of companies, without specific legislation, was introduced by the Joint Stock Companies Act 1844. Companies incorporated under this Act did not have limited liability, but it became common for companies to include a limited liability clause in their internal rules. In the case of Hallett v Dowdall, the English Court of the Exchequer held that such clauses bound people who have notice of them. Four years the Joint Stock Companies Act 1856 provided for limited liability for all joint-stock companies provided, among other things, that they included the word "limited" in their company name; the landmark case of Salomon v A Salomon & Co Ltd established that a company with legal liability, not being a partnership, had a distinct legal personality, separate from that of its individual shareholders. The existence of a corporation requires a special legal framework and body of law that grants the corporation legal personality, it ty
United States corporate law
United States corporate law regulates the governance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance rights, found in the Securities Act of 1933 and the Securities and Exchange Act of 1934, as amended by laws like the Sarbanes–Oxley Act of 2002 and the Dodd–Frank Act of 2010; the US Constitution was interpreted by the US Supreme Court to allow corporations to incorporate in the state of their choice, regardless of where their headquarters are. Over the 20th century, most major corporations incorporated under the Delaware General Corporation Law, which offered lower corporate taxes, fewer shareholder rights against directors, developed a specialized court and legal profession. Nevada has done the same. Twenty-four states follow the Model Business Corporation Act, while New York and California are important due to their size. At the Declaration of Independence, corporations had been unlawful without explicit authorization in a Royal Charter or an Act of Parliament of the United Kingdom.
Since the world's first stock market crash corporations were perceived as dangerous. This was because, as the economist Adam Smith wrote in The Wealth of Nations, directors managed "other people's money" and this conflict of interest meant directors were prone to "negligence and profusion". Corporations were only thought to be legitimate in specific industries that could not be managed efficiently through partnerships. After the US Constitution was ratified in 1788, corporations were still distrusted, were tied into debate about interstate exercise of sovereign power; the First Bank of the United States was chartered in 1791 by the US Congress to raise money for the government and create a common currency. It had private investors, but faced opposition from southern politicians who feared federal power overtaking state power. So, the First Bank's charter was written to expire in 20 years. State governments could and did incorporate corporations through special legislation. In 1811, New York became the first state to have a simple public registration procedure to start corporations for manufacturing business.
It allowed investors to have limited liability, so that if the enterprise went bankrupt investors would lose their investment, but not any extra debts, run up to creditors. An early US Supreme Court case, Trustees of Dartmouth College v Woodward, went so far as to say that once a corporation was established a state legislature could not amend it. States reacted by reserving the right to regulate future dealings by corporations. Speaking, corporations were treated as "legal persons" with separate legal personality from its shareholders, directors or employees. Corporations were the subject of legal rights and duties: they could make contracts, hold property or commission torts, but there was no necessary requirement to treat a corporation as favorably as a real person. Over the late 19th century and more states allowed free incorporation of businesses with a simple registration procedure. Many corporations would be small and democratically organized, with one-person, one-vote, no matter what amount the investor had, directors would be up for election.
However, the dominant trend led towards immense corporate groups where the standard rule was one-share, one-vote. At the end of the 19th century, "trust" systems were used to concentrate control into the hands of a few people, or a single person. In response, the Sherman Antitrust Act of 1890 was created to break up big business conglomerates, the Clayton Act of 1914 gave the government power to halt mergers and acquisitions that could damage the public interest. By the end of the First World War, it was perceived that ordinary people had little voice compared to the "financial oligarchy" of bankers and industrial magnates. In particular, employees lacked voice compared to shareholders, but plans for a post-war "industrial democracy" did not become widespread. Through the 1920s, power concentrated in fewer hands as corporations issued shares with multiple voting rights, while other shares were sold with no votes at all; this practice was halted in 1926 by public pressure and the New York Stock Exchange refusing to list non-voting shares.
It was possible to sell voteless shares in the economic boom of the 1920s, because more and more ordinary people were looking to the stock market to save the new money they were earning, but the law did not guarantee good information or fair terms. New shareholders had no power to bargain against large corporate issuers, but still needed a place to save. Before the Wall Street Crash of 1929, people were being sold shares in corporations with fake businesses, as accounts and business reports were not made available to the investing public; the Wall Street Crash saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced. They sold shares en masse, meaning meant; the result was that thousands of businesses were forced to close, they laid off workers. Because workers had less money to spend, businesses received less income, leading to more closures and lay-offs; this downward spiral began the Great Depression. Berle and Means argued that under-regulation was the primary cause in their foundational book in 1932, The Modern Corporation and Private Property.
They said di
Limited liability partnership
A limited liability partnership is a partnership in which some or all partners have limited liabilities. It therefore can exhibit elements of corporations. In a LLP, each partner is not liable for another partner's misconduct or negligence; this is an important difference from the traditional partnership under the UK Partnership Act 1890, in which each partner has joint and several liability. In a LLP, some or all partners have a form of limited liability similar to that of the shareholders of a corporation. Unlike corporate shareholders, the partners have the right to manage the business directly. In contrast, corporate shareholders must elect a board of directors under the laws of various state charters; the board organizes itself and hires corporate officers who have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. A LLP contains a different level of tax liability from that of a corporation. Limited liability partnerships are distinct from limited partnerships in some countries, which may allow all LLP partners to have limited liability, while a limited partnership may require at least one unlimited partner and allow others to assume the role of a passive and limited liability investor.
As a result, in these countries, the LLP is more suited for businesses in which all investors wish to take an active role in management. In some countries, an LLP must have at least one person known as a "general partner", who has unlimited liability for the company. There is considerable difference between LLPs as constituted in the U. S. and those introduced in the UK under the Limited Liability Partnerships Act 2000 and adopted elsewhere. The UK LLP is, despite its name legislated as a corporate body rather than as a partnership. For a fuller country-by-country listing of types of partnerships and companies, see List of business entities. Partnerships are governed on a state-by-state basis in Australia. In Queensland, a limited liability partnership is composed of at least one general partner and one limited partner, it is thus similar to. All provinces—except Yukon, Prince Edward Island, Nunavut—permit LLPs for lawyers and accountants. In British Columbia, the Partnership Amendment Act, 2004 permits LLPs for lawyers and other professionals, as well as businesses.
In China, the LLP is known as a Special general partnership. The organizational form is restricted to knowledge-based professions and technical service industries; the structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners. There is no exact equivalent of a Limited Liability Partnership in France. A limited partnership is equivalent to the French law vehicle known as a fr:Société en Commandite. A partnership company can be an equity partnership, known as a fr:Société en Participation, of a general partnership known as a fr:Société en Nom Collectif; the German Partnerschaftsgesellschaft or PartG is an association of non-commercial professionals, working together. Though not a corporate entity, it can sue and be sued, own property and act under the partnership's name; the partners, are jointly and severally liable for all the partnership's debts, except when only some partners' misconduct caused damages to another party — and only if professional liability insurance is mandatory.
Another exception, possible since 2012, is a Partnerschaftsgesellschaft mbB where all liabilities from professional misconduct are limited by the partnership's capital. The Partnerschaftsgesellschaft is not subject to corporate or business tax, only its partners' respective income is taxed. An LLP is an approximate equivalent to the Greek ΕΠΕ meaning Company of Limited Liability. In an ΕΠΕ the partners own personal shares that can be sold by a partner only when all other partners agree; the business management can be exercised either directly by the board of partners or by a General Manager. In the aspect of liability, an ΕΠΕ is identical to an LLP. In Hungary, LLP is equivalent to the Hungarian "Betéti Társaság" which must have at least two members: at least one must have unlimited liability and at least one must have limited liability. BTs have legal personhood under Hungarian law; the Limited Liability Partnership Act 2008 was published in the official Gazette of India on 9 January 2009 and has been in effect since 31 March 2009.
However, only limited sections of the Act have been ratified. Rules of the Act were published in the official Gazette on 1 April 2009 and amended in 2017; the first LLP was incorporated on 2 April 2009. In India as in many other jurisdictions, an LLP is different from a Limited Partnership. An LLP operates like a limited partnership, but in an LLP, each member is protected from personal liability, except to the extent of their capital contribution in the LLP. In India, for all purposes of taxation, an LLP is treated like any other Partnership firm. Liability is limited to each partners agreed upon contribution to the LLP. No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful business decisions or misconduct. An LLP shall be a body a legal entity separate from its partners, it will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there
Corporate law is the body of law governing the rights and conduct of persons, companies and businesses. It refers to the theory of corporations. Corporate law describes the law relating to matters which derive directly from the life-cycle of a corporation, it thus encompasses the formation, funding and death of a corporation. While the minute nature of corporate governance as personified by share ownership, capital market, business culture rules differ, similar legal characteristics - and legal problems - exist across many jurisdictions. Corporate law regulates how corporations, shareholders, employees and other stakeholders such as consumers, the community, the environment interact with one another. Whilst the term company or business law is colloquially used interchangeably with corporate law, business law refers to wider concepts of commercial law, that is, the law relating to commercial or business related activities. In some cases, this may include matters relating to financial law; when used as a substitute for corporate law, business law means the law relating to the business corporation, i.e. capital raising, company formation, etc.
Academics identify four legal characteristics universal to business enterprises. These are: Separate legal personality of the corporation Limited liability of the shareholders Transferable shares Delegated management under a board structure. Available and user-friendly corporate law enables business participants to possess these four legal characteristics and thus transact as businesses. Thus, corporate law is a response to three endemic opportunism: conflicts between managers and shareholders, between controlling and non-controlling shareholders. A corporation may be called a company. In the United States, a company may or may not be a separate legal entity, is used synonymous with "firm" or "business." According to Black's Law Dictionary, in America a company means "a corporation — or, less an association, partnership or union — that carries on industrial enterprise." Other types of business associations can include partnerships, or trusts, or companies limited by guarantee. Corporate law deals with companies that are incorporated or registered under the corporate or company law of a sovereign state or their sub-national states.
The defining feature of a corporation is its legal independence from the shareholders. Under corporate law, corporations of all sizes have separate legal personality, with limited or unlimited liability for its shareholders. Shareholders control the company through a board of directors which, in turn delegates control of the corporation's day-to-day operations to a full-time executive. Shareholders' losses, in the event of liquidation, are limited to their stake in the corporation, they are not liable for any remaining debts owed to the corporation's creditors; this rule is called limited liability, it is why the names of corporations end with "Ltd.". or some variant such as "Inc." or "plc"). Under all legal systems corporations have much the same legal rights and obligations as individuals. In some jurisdictions, this extends to allow corporations to exercise human rights against real individuals and the state, they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money into insolvency.
Corporations can be convicted of criminal offences, such as corporate fraud and corporate manslaughter. In order to understand the role corporate law plays within commercial law, it is useful to understand the historical development of the corporation, the development of modern company law. Although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece, the closest recognizable ancestors of the modern company did not appear until the 16th century. With increasing international trade, Royal charters were granted in Europe to merchant adventurers; the Royal charters conferred special privileges on the trading company. Traders in these entities traded stock on their own account, but the members came to operate on joint account and with joint stock, the new Joint stock company was born. Early companies were purely economic ventures; the development of company law in Europe was hampered by two notorious "bubbles" in the 17th century, which set the development of companies in the two leading jurisdictions back by over a century in popular estimation.
Companies inevitably, returned to the forefront of commerce, although in
United Kingdom company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal vehicle to organise and run business. Tracing their modern history to the late Industrial Revolution, public companies now employ more people and generate more of wealth in the United Kingdom economy than any other form of organisation; the United Kingdom was the first country to draft modern corporation statutes, where through a simple registration procedure any investors could incorporate, limit liability to their commercial creditors in the event of business insolvency, where management was delegated to a centralised board of directors. An influential model within Europe, the Commonwealth and as an international standard setter, UK law has always given people broad freedom to design the internal company rules, so long as the mandatory minimum rights of investors under its legislation are complied with.
Company law, or corporate law, can be broken down into two main fields. Corporate governance in the UK mediates the rights and duties among shareholders, employees and directors. Since the board of directors habitually possesses the power to manage the business under a company constitution, a central theme is what mechanisms exist to ensure directors' accountability. UK law is "shareholder friendly" in that shareholders, to the exclusion of employees exercise sole voting rights in the general meeting; the general meeting holds a series of minimum rights to change the company constitution, issue resolutions and remove members of the board. In turn, directors owe a set of duties to their companies. Directors must carry out their responsibilities with competence, in good faith and undivided loyalty to the enterprise. If the mechanisms of voting do not prove enough for minority shareholders, directors' duties and other member rights may be vindicated in court. Of central importance in public and listed companies is the securities market, typified by the London Stock Exchange.
Through the Takeover Code the UK protects the right of shareholders to be treated and trade their shares. Corporate finance concerns the two money raising options for limited companies. Equity finance involves the traditional method of issuing shares to build up a company's capital. Shares can contain any rights the company and purchaser wish to contract for, but grant the right to participate in dividends after a company earns profits and the right to vote in company affairs. A purchaser of shares is helped to make an informed decision directly by prospectus requirements of full disclosure, indirectly through restrictions on financial assistance by companies for purchase of their own shares. Debt finance means getting loans for the price of a fixed annual interest repayment. Sophisticated lenders, such as banks contract for a security interest over the assets of a company, so that in the event of default on loan repayments they may seize the company's property directly to satisfy debts. Creditors are to some extent, protected by courts' power to set aside unfair transactions before a company goes under, or recoup money from negligent directors engaged in wrongful trading.
If a company is unable to pay its debts as they fall due, UK insolvency law requires an administrator to attempt a rescue of the company. If rescue proves impossible, a company's life ends when its assets are liquidated, distributed to creditors and the company is struck off the register. If a company becomes insolvent with no assets it can be wound up by a creditor, for a fee, or more by the tax creditor. Company law in its modern shape dates from the mid-19th century, however an array of business associations developed long before. In medieval times traders would do business through common law constructs, such as partnerships. Whenever people acted together with a view to profit, the law deemed. Early guilds and livery companies were often involved in the regulation of competition between traders; as England sought to build a mercantile Empire, the government created corporations under a Royal Charter or an Act of Parliament with the grant of a monopoly over a specified territory. The best known example, established in 1600, was the British East India Company.
Queen Elizabeth I granted it the exclusive right to trade with all countries to the east of the Cape of Good Hope. Corporations at this time would act on the government's behalf, bringing in revenue from its exploits abroad. Subsequently, the Company became integrated with British military and colonial policy, just as most UK corporations were dependent on the British navy's ability to control trade routes on the high seas. A similar chartered company, the South Sea Company, was established in 1711 to trade in the Spanish South American colonies, but met with less success; the South Sea Company's monopoly rights were backed by the Treaty of Utrecht, signed in 1713 as a settlement following the War of Spanish Succession, which gave the United Kingdom an assiento to trade, to sell slaves in the region for thirty years. In fact the Spanish let only one ship a year enter. Unaware of the problems, investors in the UK, enticed by company promoters' extravagant promises of profit, bought thousands of shares.
By 1717, the South Sea Company was so wealthy. This accelerated the inflation of the share price further, as did the Royal Exchange and London Assurance Corporation Act 1719, whi