The Limited Liability Act 1855 was an Act of Parliament that first allowed limited liability for corporations. In the House of Lords there was considerable opposition to it. Earl Grey said: 'It proposes to depart from the old-established maxim that all the partners are individually liable for the whole of the debts of the concern.'
Limited Liability Act 1855 was expanded into the Companies Act 1862 which also allowed limited liability for insurance companies.
Sir Arthur Bryant said: ‘The consequences of the Companies Act 1862 completed the divorce between the Christian conscience and the economic practice of everyday life. Legally speaking it paganised the financial and commercial community. Henceforward an astute man by adherence to legal rules which had nothing to do with morality could grow rich by virtue of shuffling off his most elementary obligations to his fellows.’
Elsewhere it has been said that 'Limited liability is contrary to biblical teaching because, exceptionally in the law of contract, it allows that certain debts may be left unpaid. As a result shareholders, who retain rights of ownership, are excused responsibilities of ownership, while directors bear some of the responsibilities of ownership, and share some of the rewards, but carry few of the risks. This flaw at the heart of corporate structure leads to problems in corporate governance, absence of corporate social accountability, and an unhealthy trend towards corporate giantism. Solutions lie, it is argued, in policies that restore shareholder liability, and incentives for business not to incorporate.'
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http://www.jubilee-centre.org/risk-reward-and-responsibility-limited-liability-and-company-reform-by-michael-schluter/
Edward William Cox, a lifelong member of the Conservative party wrote in 1855 “That he who acts through an agent should be responsible for his agent's acts, and that he who shares the profits of an enterprise ought also to be subject to its losses; that there is a moral obligation, which it is the duty of the laws of a civilised nation to enforce, to pay debts, perform contracts and make reparation for wrongs. Limited liability is founded on the opposite principle and permits a man to avail himself of acts if advantageous to him, and not to be responsible for them if they should be disadvantageous; to speculate for profits without being liable for losses; to make contracts, incur debts, and commit wrongs, the law depriving the creditor, the contractor, and the injured of a remedy against the property or person of the wrongdoer, beyond the limit, however small, at which it may please him to determine his own liability"
"Although corporations are an entrenched force in our civilization that probably aren’t going anywhere soon, it’s not obvious that corporations are morally justified or supported by any system of justice. Libertarian justice don’t necessarily support limited liability considering that it allows companies to disrespect human rights and refuse to pay the full damages done. Utilitarian justice doesn’t necessarily support corporations because it’s not clear that limited liability is really best for the “greater good.” Rawls’s theory of justice doesn’t necessarily support corporations because limited liability can give the wealthy more rights and less responsibilities than are enjoyed by the poor, and it’s not clear that the poor will benefit from it."
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"the very purpose of limited liability was to liberate business from the constraints of ethical scruples"
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