Joint Stock Company


A joint-stock company is a business entity in which shares of the company’s stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.

Joint Stock Company

What is a ‘Joint Stock Company’

A joint stock company is an organization that falls between the definitions of a partnership and corporation in terms of shareholder liability. In the United States, shareholders of joint stock companies have unlimited liability for company debts, but in the United Kingdom, shareholder liability is limited to the nominal value of shares held by each shareholder.

Explaining ‘Joint Stock Company’

In 17th-century England, joint stock companies were the forerunner to the modern business structure of a corporation. In many cases, these companies were chartered by the Crown of England for the purpose of undertaking high-risk endeavors that would return a profit. Capital was raised through the investment of wealthy individuals who would share in the profits with liability limited to the amount of their initial investment. In American history, the Virginia Company of London is the most familiar joint stock company.

Historical Example of a Joint Stock Company

In 1606, King James chartered the Virginia Company of London as a joint stock company. The Virginia Company was formed as a profit-making venture for the purpose of colonizing the New World for England. The company sold shares to raise capital, entitling each shareholder to a proportional share of the net profits while limiting their total liability to the value of their shareholdings. The company sponsored three ships to set sail for Virginia, where they established a small colony on Jamestown Island.

Further Reading

  • Legal origin, juridical form and industrialization in historical perspective: the case of the employment contract and the joint-stock company – [PDF]
  • Path dependence, change and the emergence of the first joint-stock companies – [PDF]
  • Voluntary financial reporting on the internet: analysis of the practice of stock-market listed croatian and slovene joint stock companies – [PDF]
  • Capitalism without the capitalist: The joint stock company share and the emergence of the modern doctrine of separate corporate personality – [PDF]
  • Female investors in the first English and Welsh commercial joint-stock banks – [PDF]
  • Legal forms of joint-stock companies and corporate behavior in Russia – [PDF]