A more thorough explanation:

Definition: The Bubble Act was a law passed in England in 1720 to prevent fraudulent activities in corporations.

The Bubble Act was introduced after the South Sea Bubble, a financial scandal that involved the South Sea Company. The company was granted a monopoly to trade with South America, but it used its power to manipulate the stock market and defraud investors. The Bubble Act was created to prevent similar incidents from happening in the future.

Under the Bubble Act, any company with more than six shareholders was required to obtain a royal charter to operate legally. This made it difficult for fraudulent companies to operate, as they would not be able to obtain a charter.

For example, if a group of people wanted to start a company and sell shares to the public, they would need to obtain a charter from the king or queen. This would ensure that the company was legitimate and not a fraudulent scheme.

The Bubble Act was eventually repealed in 1825, as it was seen as a hindrance to economic growth. However, its legacy lives on in modern corporate law, which seeks to prevent fraudulent activities in companies.