Over a century ago, a Company could only acquire legal personality by obtaining a Royal Charter or promoting a „Special Act.‟
The South Sea Company was formed by a Royal Charter in 1711 to incorporate the holders of a floating debt in exchange for a monopoly of trade in Latin America.
Speculators drove up the price of the South Sea stock to a frenzy. This boom in floatations led to the infamous South Sea Bubble in 1720 which resulted in the crash of the scheme and similar joint-stock companies making fraudulent claims at the time.
The Bubble Act 1720 was a response by Parliament to boost public confidence and investors participation following the burst of the South Sea Company. Under the Act, all newly incorporated JointStock Companies were required to be incorporated by a charter or an Act of Parliament.