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•62 The 100 Greatest Business Ideas of All Time
£1 and was not liable for any further contribution in the event of the company’s
insolvency.
Leading from the joint stock company is the need for a set of rules that manag-
ers have to obey in order to give a fair picture of the financial health of the enter-
prise. This is the audit.
The repercussions of the simple idea of shareholder investment are legion. Ideas
that would never have got started became possible and the current system of equi-
ties was born.
Takeovers became possible. Takeovers are a pretty good business idea if you
are one of the army of professional accountants, bankers and lawyers who charge fat
fees for making them happen, sometimes, some would say, at the expense of share-
holders and workers. Takeovers also give the directors of the larger entity more
power and bigger salaries.
Convertible loan stock is a system whereby the shareholder takes a reduced risk
for the certainty of return in the early stages of an investment. Indeed it is possible to
describe the attributes of shares in any way that suits the board and the sharehold-
ers. Without these devices, for example, Eurotunnel Idea 22 would have long since
sunk.
On the other hand
The limited company enables individuals to walk away from the mess they
have created under its protection, and then do it all over again somewhere else.
The company audit enables shareholders to sleep at night while risking
bankruptcy. It is very similar to the insurance policy that permits the house-
holder to sleep at night while their house is burgled. When they wake up to a
calamity they discover, because of the small print, that they actually have no
redress at all
