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Commenda was the situation in which management partners bore full responsibility,
but the sleeping contributors were only liable to the extent of the contributions.
Societas continued to prosper in England because it was seen as the legal formula
available to meet the growing demand of trade while commenda did not take root. 22
Commenda was believed not to have any impact on English law due to their poor
book-keeping system compared to continental countries. 23 An efficient book-keeping
system was essential in order to determine the extent of an individual‟s liability.
Changes in trade and political conditions in the sixteenth and early seventeen
centuries resulted in a large number of joint stock companies dissolving because they
were no longer viewed as acceptable. 24 During this time, there was a movement for
free trade and monopoly privileges conferred on joint stock companies were
successfully attacked. 25 As a consequence of the free trade movement, some
companies were compelled to give up their monopolistic rights and make changes to
the companies‟ structures. 26 These companies did so by adopting regulated forms
which allowed greater freedom to individuals‟ trade. 27
Some companies, however, were more fortunate in surviving with monopolistic
rights due to their governmental rather than commercial functions. 28 The example of
such company was the East India Company which succeeded in accumulating vast
empires in Asia. 29 The success of the East India Company had ensured its survival
until the middle of nineteenth century. Likewise, other companies which were
22 Ibid, at 249.
23 Cooke above n9 at 46.
24 Holdsworth above n2 at 209.
25 Ibid, at 209.
26 Ibid.
27 Ibid.
28 Ibid, at 202
29 Ibid.
28