Appendix CASE ONE - Collection Point® | The Total Digital Asset ...

The Development of Danish Joint Stock Company Rules 167
insurance companies and manufacturing enterprises) but also for private
business associations. 4
In Denmark the establishment of partnerships as well as of joint stock
companies was looked upon as a form of contract or deed of settlement.
The principle of freedom of contract was accepted early in these relations.
Contracting was looked upon as a matter of private law while the grant of
a charter was a matter of public law. Danish legal theorists distinguished
between companies carrying out 'public' functions and operations and companies
which were only 'private' societies. The first had to have charters
which, among other things, gave them monopolies and other benefits such
as freedom from taxes or from duties or customs. They acted in an official
capacity and on behalf of the state. The grant of a charter might be regarded
as providing a company with special public functions or a status as a public
agency. In questions of property and contract the companies were regarded
inter paries as subject to private law.
In Denmark as in England purely private companies, which did not attract
much interest from the state, developed in parallel to the public ones. Their
contracts or deeds of settlement were only of interest to public authorities if
they needed some special rights or freedoms and therefore asked for a special
privilege. In order to start a factory with monopoly or special patent rights
something more than a contract or deed of settlement was needed. A charter
was necessary in order to allow the factory to operate, but not in order to
have the business recognized as a moral or legal person. The private deed
of settlement in itself might, however, be given the king's confirmation in
the form of a special grant, with the purpose and result that the contractual
conditions were valid not only among the participants, but also in relation to
third parties, the surrounding world of creditors and new contracting partners.
Such confirmation gave a private deed of settlement the effect of legislation.
Only those deeds of settlement (conventions, byelaws) which sought special
privileges were given royal confirmation. Such privileges might be limitation
of liability, free transferability of shares or protection against execution or
pursuit by creditors. The practice of granting charters containing special
privileges to all sorts of small or large enterprises became an administrative
burden for the central civil service and the government in the course of the
first half of the nineteenth century. Privileges became easy to obtain. A
wish for legislation in the field of company law was put forward in public
debate. The privilege system was originally a system of effective control
and management of a kind in commercial and industrial matters for the
government. The developing burden just mentioned made the control no
longer effective. Everybody who asked for a grant was given it without
further investigation, unless the enterprise had a special status or special
functions, for instance, where it was a public utility. Railway companies
4 Willard Hurst, The Legitimacy of the Business Corporation in the Law of the United States,
1780-1970 (Charlottesville, 1970).