Corporations (Upper Canada)
There were two types of corporations at work in the Upper Canadian economy: the legislatively chartered companies and the unregulated joint stock companies. These two business forms had different legal standing; chartered corporations had a "separate personality" - they were a legal person quite distinct from its members or shareholders, a legal fiction which protected those shareholders with limited liability. In contrast, joint stock companies were made illegal by the English Bubble Act of 1720. Joint stock companies were considered extensive partnerships under common law, and English legislation limited these to a maximum of six partners. Without incorporation , the company was not considered a "separate personality." It could not hold property; this was held by trustees, who usually had to provide a bond or security. Without incorporation, the company could neither sue nor be sued at law. And without incorporation, shareholders were personally responsible for the debts to the company to the full extent of their personal property; shareholders were not protected by limited liability. There were, then, significant legal hurdles that made the joint stock company an unwieldy form of partnership. Despite the difficulties in the unincorporated joint stock company form, it became increasingly popular in the  late eighteenth century in Britain as the means through which public works were carried out. General public feeling was that all corporations, chartered or otherwise, should only be founded for the public benefit. Although a limited number of companies were formed for the purpose of for-profit trade, others were simply a way of controlling forms of common property. Joint-stock companies. The joint stock company was popular in building public works, since they should be for general public benefit, and would otherwise be sacrificed to "legislated monopolies" with "exclusive privileges" such as the Bank of Upper Canada. As late  as 1849, even the "moderate" reform politician Robert Baldwin was to complain that "unless a stop were made to it, there would be nothing but corporations from one end of the country to the other." Radical reformers, like William Lyon Mackenzie, who opposed all such "legislated monopolies," saw joint stock associations as the only protection against "the whole property of the country... being tied up as an irredeemable appendage to incorporated institutions, and put beyond the reach of individual possession." As a result, most of the joint stock companies formed in this period were created by political reformers who objected  to the legislated monopolies granted to members of the Family Compact. The political connection results from the fact the company was a voluntary association that was "also a mini-republic. Typically, each was a self-governing body composed of members of equal standing who had freely consented to join. Members created an association, devised its rules and policies, and elected officers from among their ranks to carry out their wishes." In Upper Canada, the joint stock company is an interesting example of the voluntary "mini-parliament" because it fostered notions of "responsible government" through its separation of ownership and management . Responsible government usually means cabinet responsibility to the elected House of Assembly; in alternate terms, of management to stockholders. However, responsible government had a second sense in the case of joint stock companies, i.e. the accountability of stockholders to management. Since joint stock companies lacked limited liability, stockholders were responsible for all the company's debts to the full extent of their personal property. They were an incubator of stakeholder democracy. The joint stock company required an unusually high level of "vigilance" from its members, a word borrowed from the "committees of vigilance" later established by the reformers; they remained  ultimately responsible for the actions taken by their representatives in parliament and on the board of directors. See Frederick H. Armstrong, "Handbook of Upper Canadian Chronology", rev. ed. (Toronto, Dundurn Press, 1985), Part VII, for a list of the joint stock companies incorporated during this period in Upper Canada. Chartered companies. William Lyon Mackenzie frequently complained about the manner in which members of the Family Compact utilized their official positions for monetary gain, especially through corporations such as the Bank of Upper Canada, and the two land companies (the Clergy Corporation and the Canada Company) that between them controlled two  sevenths of all the land in the province. The Bank of Upper Canada, for example, had been founded by William Allan and the Rev. John Strachan, key members of the Family Compact, both of whom were Executive and Legislative Councillors. Although they lacked the minimum capital needed to found the bank, they persuaded the government to subscribe for a quarter of its shares. During the 1830s, a third of the bank's board were Legislative or Executive Councillors, and the remaining all magistrates. Despite repeated attempts, the elected Legislature - which had chartered the bank - could obtain no details about the  bank's workings.