ABSTRACT
The chapter describes the origins and development of the joint stock company and the concept of limited liability, and their implications for investors and capital markets. The most famous example of a joint stock company is the East India Company. The New River Company is the oldest company with stock listed on the London Stock Exchange, but it is the history of the East India Company which best illustrates the transition from terminable to permanent investment in a large trading company. Trade in corporate securities may be divided into 'primary' markets where the company issues shares in exchange for cash or other assets and 'secondary' markets which bring together members of the general public who wish to buy and sell shares issued by a company. The chapter argues that the rise of the limited liability company and the significance of that phenomenon for the separation of ownership from management and the need for corporate accountability.
