Chrysalis Records was a British record label that was created in 1968 by Chris Wright and Terry Ellis. The name is both a reference to the pupal stage of a butterfly and a combination of its founders names. Chrysalis entered into a licensing deal with Island Records for manufacturing and distribution, and the early album releases not just used the Island numbering system but also sometimes its label design for international markets.
Wright and Ellis started a talent agency in 1967, which they called Ellis Wright. Two of the bands they represented were Ten Years After and Jethro Tull, and to record them Ellis and Wright formed their own label. They arranged to license the initial discs by the bands to leading independent Island Records, which agreed to give Wright and Ellis their own label if the early releases were hits. (Source)
In the U.S. Chrysalis was distributed by Warner Bros. from 1972 to 1976 when it switched to independent distribution. In the U.K. distribution changed to EMI in 1974, later to Phonogram.
Chrysalis formed or bought several subsidiary labels in the 1970s and 1980s, including 2-Tone and Ensign. In 1985 Terry Ellis sold his stake in Chrysalis to Chris Wright who took the company public following a reverse takeover of MAM. Chrysalis was eventually sold to EMI and 1991 and folded into EMI subsidiary and flagship label EMI Records in 2005.