The preindustrial framework of business organization in England was formed over several centuries, from the late middle ages until the passage of the famous Bubble Act in 1720, and persisted up to 1844 when the process of industrialization was already well under way. This preindustrial framework allowed the formation of joint-stock corporations only by specific authorization of the State while outlawing other forms of joint-stock association. It permitted the spontaneous creation of partnerships, yet denied them the privileges of limited liability or of separate legal entity. It explicitly prohibited the establishment of new joint-stock corporations and large partnerships in the financial sectors: banking and marine insurance. After 1825, a gradual transformation ensued and the modern legal framework began to emerge. The Bubble Act was repealed in 1825; minor reforms took place in the 1830s; an Act of 1844 regularized free incorporation by registration and provided for the unobstructed formation of companies with separate legal entity and transferable shares; and, by 1855–1856, general limited liability was attached to incorporation. The framework that developed during this period is essentially the framework that prevails today.

For more than a century during which the legal framework was unchanged, between the passage of the Bubble Act and the mid-nineteenth century, England went through an economic and social evolution known as the industrial revolution, expressed in a profound structural transformation. England's population increased at an unprecedented rate, urbanization reached high levels, and new industrial towns emerged.