Company Legislation
"Accountancy practice in the United Kingdom, unlike the United States, has been greatly influenced by company legislation. The essence of modern company law is that it grants by registration with a government agency the rights of corporate personality, perpetual succession and limited liability" (Parker, 1986 p.8). The South Sea Company took over England's national debt and issued stock in an attempt to make money. This business concept never worked. After the South Sea Company's bubble popped, the result was the Bubble Act of 1720. "It aimed to correct four evils: (1) excessive stock speculation, (2) formation of fraudulent joint stock companies, (3) the use of corporate prerogatives by unincorporated firms, and (4) the use of corporate charters to conduct inappropriate types of business. This act not only denied limited liability status to all firms not incorporated by Crown or Parliament, but was used as a policy instrument to restrain the formation of new corporations" (Chatfield p.81). South Sea Company is an example of how company decisions affect the accounting profession and laws in England.