The word “corporation” comes from the Latin word “corpus”, which means body. Before the 1600s, charitable organizations like hospitals, colleges and monasteries were allowed to become independent before the law by asking for corporate status.

After 1600, Corporations started acting outside the constitutions and became commercial, the first of which was the East India Company.

This company got exclusive permission from Queen Elizabeth I to trade with all the countries eastward from the Cape of Good Hope. This was a trade association with monopoly in the Indies, the company was chartered in 1600; trade here was conducted only by partnerships and individuals who were company members.

These partnerships went on to become a single partnership in the seventeenth century. The members of this corporations were later able to receive shares in the joint stock of the company in exchange for giving up individual partnership stock. The company was then able to trade this stock in its own name and make a profit, which was distributed among the members or shall I say shareholders. Thus the East India Company became the first joint stock holding company in Britain. This was unchallenged but unlawful, as it was outside the company’s constitution to turn itself into a commercial entity.

By 1720 the East India Company turned into a commercial corporation and others soon began to follow. In condoning these unlawful acts the government began to grant charters for Commercial Corporation, which then began to look for finance in outside investors by selling shares to them. In about 1711 the South Sea Company was formed, which was a dubious company with monopoly in trade in South America. This company’s share prices rose wildly based on speculations of profit as when the Company would gain access to South American ports. The Royal Exchange along with the 1719 London Assurance Corporations Act too contributed to the inflations of these shares.It was later learned that these port were not accessible and so one fine day in 1720 the share prices slumped overnight and the company’s founders fled. This was the first stock market crash and many investors were ruined. This came to be called the South Sea Bubble.

In 1970 the Bubble Act was passed which banned speculative buying and selling of shares, only people who were really involved with the running of the company could buy shares. Many restrictions were placed on new companies and the government nationalized many commercial corporations including the powerful colonial companies.

In 1825 the Bubble Act was withdrawn allowing free share trading. In 1844 the Joint Stock Companies Act did away with the requirement for companies to get a specific charter. Companies could now be formed by registering themselves and these were allowed to carry out any commercial activity as stated in their constitution. In 1855, the parliament finally approved the act of companies, giving them limited liability, where in a shareholder would not lose any more than his investment if the company became insolvent and when a corporation slumps limited liability would safeguard share holders and puts the cost on its creditors.

It is noteworthy to mention that according to an article in the Economist in December 2006, the Joint Stock Company saw western commerce move ahead of its Middle East rivals in the post renaissance period.