Small Businesses and the Corporate Form: Burden or Privilege?
There is a strong intuitive case for the creation of a new legal form through which small businesses in the United Kingdom could operate. The view is widely held that our companies legislation, fashioned with the public, quoted company in mind, is of a length and complexity which is wholly inappropriate to the small, private company.1 The development of the theory of the company as a nexus of contracts2 has strengthened the analysis of the limited liability company as a device for raising capital and reducing agency and monitoring costs. This is a corporate model which forces its supporters to distinguish the unquoted ownermanaged company from the public listed corporation and depict them as altogether different creatures.3 The dichotomy revealed by this analysis has come to dominate our understanding of company law. The weight placed by economists and politicians on the small business as a vehicle for entrepreneurship, economic growth and job creation in recent years4 has also drawn attention to the apparent inadequacy of the legal packages available to small firm owners.5 The fashion for deregulation6 emphasises the facilitative role of company law, which leads to proposals for simplification and removal of burdens from small firms. At the same time, legislation and other forms of binding