History of Shares

Shares have been around in various forms for thousands of years, serving as the primary mechanism through which ownership in companies and entities can be divided, and the means by which new investors can be welcomed into the fold. While of course, the concept of shares and the specific legal setup has become much more refined and sophisticated with time, shares in principle have existed since the times of ancient Rome, as a cornerstone of commerce and early corporate finance.

The Romans developed mechanisms akin to what we would consider to be a company today, with the backing of the authorities, to carry out specific purposes or to deliver certain projects. These involved the first known classification of shareholders, who were involved to help provide capital for the projects involved. This early construct was closely aligned with the state, and only began to develop its own legal identity and distinct legal personality after influence from the early German thinking on corporate structure.

After its early introduction, the company was developed considerably across Europe by the Church and the Canon Law, which laid down some fundamental legal points as we consider them today. For the first time, the company was a personality distinct from its member, which would therefore survive in perpetuity beyond the death of those involved, and the basic principles of agency law began to flesh out. Where the Church first tread, so charities and other public organisations followed, adopting the Church's model of business structure to develop the entity as we've come to know it.

Packaging company Stora Enso, still in existence today, is derived from the oldest known limited company, and issued the first recorded example of a share certificate in 1288. By this point, the share was a relatively understood albeit basic legal right, and one that was fundamental in helping expand the growth of commerce throughout the middle ages.

By the early 17th century, the first signs of organised stock trading activity in Europe were evident, thanks to the Dutch East India Company, which issued shares to the public for the first time in Amsterdam in order to fund expeditions and activities in Asia. This first issue was pivotal in providing the Dutch East India Company with the capital to fuel its growth into one of the world's largest companies of its time, and one of the most influential on a multinational level.

But it was with the advent of the Joint Stock Corporation Act in the UK in 1844 that companies and shares really started to take shape. For the first time, the liability of companies was limited, and parties could hold a joint stock in companies, divisible by recognisable shares. This, followed by three successive Companies Acts taking us up to 2006 helped transform the economy of the UK and the rest of the world, and has given us the multi-trillion capitalisations of global companies we're used to seeing today.

Shares have had a long and interesting history, and their story is one that is likely to continue to change over time. While many of the sweeping changes have already taken place, the future for shares and share trading looks set to be increasingly shaped by technology, as the markets continue to embrace the systemic advancements that improve share dealing efficiency and drive down cost.