View/Open - Research Commons - The University of Waikato

courts were also granted powers under these Acts to investigate, to ascertain the
causes of the companies‟ failures and to discover any abuses inflicted on them.
Members were personally liable for the companies‟ debts because, at the time,
limited liability had not been available to all companies.
Some provisions in Australian legislation on joint stock companies and their
winding-up preceded the legislation in England; for example, the provisions
contained in the Absent Debtors Act were passed in New South Wales in 1840 while
the legislation in England with the same provisions was passed in 1844. 182 The
Absent Debtors Act 1840 permitted an action being instituted against members of a
partnership as representatives without having to name every member in the suit,
which was not available to creditors in England until 1844. 183
The introduction of the principle of limited liability by the UK Limited Liability Act
1855 marked a new beginning in the history of company law. The Act conferred
limited liability on members of the company and the concept of corporate personality
was introduced. The UK Companies Act 1862 simplified the procedures for
companies to obtain limited liability status by complying with the statutory formality
of registration. 184 The Act provided detailed winding up procedures including the
application of the bankruptcy pari passu principles into corporate insolvency and
imposing personal liability on the directors or officers of the company who, in the
course of winding up, proved guilty of misfeasance. 185 In addition, the courts were to
have regard to the wishes of creditors and contributories when making an order for
compulsory winding up. 186
182 Keay above n97 at 21.
183 Ibid.
184 Cork Report n 74 above at [76].
185 Holdsworth A History above n147 at 58.
186 Ibid.
54