Introduction

The corporate form is used pervasively in the United Kingdom. In 2005 there were 1,968,000 private companies (‘Ltd’) and 11,600 public companies (‘Plc’) on the companies' register. In the year 2004–2005 there were 332,700 new private companies incorporated and 1,100 public companies. In 2005, 43,600 companies were struck off the register and 4,200 were wound up. The rate of new incorporations has been significant: it is estimated that since 1997 new incorporations have risen by over 60% and the number of foreign firms incorporating in the UK has more than quadrupled. A salient feature of UK company law is ease of access to the corporate form. No barriers of any substance are placed in the way of obtaining corporate status. There is a ‘free market’ rationale for ease of incorporation – provided parties are aware that they are dealing with a limited liability company they can protect their own interests. To the extent that the corporate form can be abused, control of abusive practices is by means of a liability rule applied ex post and by an ex ante rule that is designed, for example, to ensure economic viability. Occasionally, UK company law will use a property rule to protect the interests of the dramatis personae of company law. One example of this are the provisions on shareholder pre-emption rights, which use a property protection rule, the conferral of a right of pre-emption, rather than a liability rule, that is, an ex post legal remedy where a shareholder has been unfairly treated by a particularallotment.