The First Company to Issue Stock
The Dutch East India Co. holds the distinction of being the first company to offer equity shares of its business to the public, effectively conducting theworld's first initial public offering (IPO). It also played an integral role in modern history's first stock market crash.
Often referred to by the acronym VOC, short for its Dutch nameVereenigde Oost-Indische Compagnie, the company was formed in 1602 by the States General of the United Netherlands, granting a 20-year monopoly on trade with the East Indies, plus sovereign rights in any newly discovered territories. Founded in 1602, along with the creation of the Dutch East India Company (VOC), the Amsterdam Stock Exchange is considered the oldest, still-functioningstock exchange in the world.
Key Takeaways
- The Dutch East India Co. is widely thought to be the first company to allow the public to invest in its business, in what was the world's earliest initial public offering (IPO).
- Commonly known as "VOC," for its Dutch name Vereenigde Oost-Indische Compagnie, the spice company thrived mainly due to its monopolistic hold over the East Indies.
- Investors ran the risk of unprofitable voyages due to unpredictable spice supplies.
Understanding the First Company to Issue Stock
The Dutch East India Company was one of the earliest businesses to compete for the exports from the spice and slave trade. It was ajoint-stock companyand would offer shares to investors who would bankroll the voyages. Financiers required a safe and regulated place where buy and sell shares of these early global enterprises.
Because it was granted a charter from the Dutch governing body, it was bestowed with incredible powers that were enjoyed by a small collection of merchant ships that formerly competed with one another in the spice market. These merchants would later form limited liability companies, with which investors would fund voyages in return for a percentage of the profits. But these investments were speculative due to the unpredictability of the spice supply, and there was consequently no guarantee that any given voyage would generate profits.
The first formal exchange is commonly thought to be the commodities exchange established in 1531 in Antwerp, Germany, where traders exchanged promissory notes and commodities.
For example, when two ships arrived simultaneously, a supply glut occurred, which depressed prices, thus eroding profits for both merchants and investors. Competition and corruption eventually eroded VOC's monopolistic hold, and the VOC was formally dissolved around 1800.
Notable History
Once the charter was locked in place, VOC merchants issued permanent shares in an ongoing enterprise whenever they required additional capital to outfit a proper fleet. VOC also issued bonds to generate further investments, which it used to fund individual voyages, effectively becoming the first multinational interest when it set up headquarters in Asia.
The Dutch East Indies Company, while shuttered in the late 1700s, was the driving force behind and paved the road for Dutch imperialism during the 1800s.
Reportedly, in 1634 VOC ships carrying tulip bulbs helped contribute to a supposed stock market crash later referred to as Tulipmania. From 1679 to 1772, the company paid a regular dividend that yielded between 12% and 40%. In fact, the VOC continued to exist and operate in one form or another until the end of the 18th century.
What Was the First Ever Stock?
The Dutch East India Company issued the first recorded stock certificate on the Amsterdam Stock Exchange.
Was the Dutch East India Company Dutch or English?
The Dutch East India Company (EIC) was created by the States General in 1602. The East India Company was an English company established two years before the Dutch EIC.
What Did the Dutch East India Company Do?
The Dutch East India Company was established to take advantage of trade opportunities in the "East Indies." The charter authorized the company to appoint governors and judicial officers and raise armed forces in the countries they traded in to facilitate profitable trading.
Correction—June 30, 2022: A previous version of this article misstated the entity that established the Dutch East India Company.
FAQs
Understanding the First Company to Issue Stock
What was the first company to issue stock? ›
1611: The first modern stock trading was created in Amsterdam. The Dutch East India Company is the first publicly traded company, and for many years, it is the only company with trading activity on the exchange.
Which company was the first to issue stock in the 17th century? ›
The launch of the Dutch East India Company in 1602 initiated Amsterdam's transformation from a regional market town into a dominant financial center. The Company introduced easily transferable shares, and within days buyers had begun to trade them.
What was the first company stock exchange? ›
The Dutch East India Company (VOC) held its 'initial public offering' (IPO) in August 1602. It was the first of its kind in world history and therefore a key event in financial history, and the history of the capitalist world.
What is the first time a company issues stock to the public? ›
The first time a company issues stock to the public is called an initial public offering (IPO). Once a company issues an IPO, the stock can be traded on a stock market exchange. When an investor purchases a share of stock, the investor is buying an ownership interest in the company.
What is the oldest stock company? ›
100 Stocks
| No. | Symbol | Founded |
|---|
| 1 | GSK | 1715 |
| 2 | NWG | 1727 |
| 3 | BIRK | 1774 |
| 4 | IHG | 1777 |
66 more rowsIn the beginning there were five securities traded in New York City with the first listed company on the NYSE being the Bank of New York.
Which was the first corporation in history to issue stock in 1606? ›
The first stock certificate was issued in 1606 by the Dutch East India Company. Today, securities are recorded almost exclusively electronically using a process known as book-entry form.
What was the first trading company in history? ›
The United East India Company (Dutch: Vereenigde Oostindische Compagnie [vərˈeːnɪɣdə oːstˈɪndisə kɔmpɑˈɲi], abbreviated as VOC, Dutch: [veː.oːˈseː]), commonly known as the Dutch East India Company, was a chartered trading company and one of the first joint-stock companies in the world.
Which was the first stock exchange in World 1773? ›
Although rudimentary markets for trading stocks and bonds emerged in Amsterdam in the 1600s, the first major stock exchanges were established in London and New York. The London Stock Exchange was formed in 1773, facilitating the buying and selling of shares.
The Dutch East India Co. is widely thought to be the first company to allow the public to invest in its business, in what was the world's earliest initial public offering (IPO).
Who is the oldest stock exchange? ›
The Amsterdam stock exchange is considered the oldest "modern" securities market in the world. It was created shortly after the establishment of the Dutch East India Company (VOC) in 1602 when equities began trading on a regular basis as a secondary market to trade its shares.
What is the first largest stock exchange in the world? ›
The largest stock exchange in the world is the New York Stock Exchange. Other large stock exchanges include the Nasdaq, the National Stock Exchange of India, the Hong Kong Stock Exchange, the Singapore Stock Exchange, and the Shanghai Stock Exchange.
What company's first stock issue? ›
An IPO is an initial public offering. In an IPO, a privately owned company lists its shares on a stock exchange, making them available for purchase by the general public. Many people think of IPOs as big money-making opportunities—high-profile companies grab headlines with huge share price gains when they go public.
What is it called when a company first issues stock? ›
An IPO is an initial public offering, in which shares of a private company are made available to the public for the first time. An IPO allows a company to raise equity capital from public investors.
What is the first stock issue available to the public called? ›
When a private company first sells shares of stock to the public, this process is known as an initial public offering (IPO).
Who invented stock company? ›
Who invented stock market? There is no single person who is attributed for the invention of the stock market. However, the first stock markets emerged in 15th century Europe, in Antwerp and London. The modern stock market originated in Amsterdam in 1602 with the establishment of the Dutch East India Company.
What was the first company with shareholders? ›
The United East India Company (Dutch: Vereenigde Oostindische Compagnie [vərˈeːnɪɣdə oːstˈɪndisə kɔmpɑˈɲi], abbreviated as VOC, Dutch: [veː. oːˈseː]), commonly known as the Dutch East India Company, was a chartered trading company and one of the first joint-stock companies in the world.
