The origin of…Share

“Shareholders have the right and obligation to set the parameters of corporate behavior within which management pursues profit.” Eliot Spitzer

Post 70 Share

The history of modern shares starts with the emission of shares by the Verenigde Oost-Indische Compagnie (VOC, Dutch East India Company) in 1602. In return for putting money in the risky journeys the VOC undertook, the company offered traders a part of the profit they made. The VOC was the first joint-stock company in the world with freely transferable shares and became the first multinational. This way a market of supply and demand developed and the shares were traded on the Amsterdam Stock Exchange. Due to rumors of richly loaded ships, share prices in the VOC climbed.
The first few years profits were reinvested and the first dividend payment occurred in 1610. These first dividend payments were made party in money and partly in spices, like foelie (mace) and pepper. Until 1696 the dividend yield was between 12% and 63%.
At the same time trading in futures originated, where shares could be either sold or bought at a moment in the future at a predetermined price (agreed by seller and buyer). There were also sellers who sold futures without owning them (short selling), hoping that the share would trade at a lower price. This was not allowed and short selling was immediately banned in 1610 (though some sellers ignored this prohibition).

Shares represent a part of the ownership in a business and there may be different classes of shares, related to privileges, ownership rules or share values. Although the shareholder owns a percentage of the company, it does not give him the right to use a company´s equipment, building etc, because the company is considered a legal person that owns all its assets itself. Shareholders’ rights to a company’s assets are subordinate to the rights of the company’s creditors and shareholders are not liable in any way in case a company goes bankrupt.
Owning the majority of the shares in a company does not mean having absolute control of the company. A majority shareholder can have some influence on the company´s policy, but the board must respect the interests of all shareholders.

The return on shares consists of two parts: the possible increase in value of the share and the dividend yield paid by the company.

a share of the value of a company which can be bought, sold, or traded as an investment (source: Merriam Webster).

The English share comes from Old English scearu, a cutting/shearing/a part or division, from Proto-Germanic *skaro-, from the Proto Indo European root *(s)ker-, to cut. The first evidence of share as part of the capital of a joint stock company comes from around 1600.
Dutch aandeel comes from Middle Dutch andel, share/part, from Middle High German anteil, share/part.
Spanish acción and Italian azione come from Latin actio, act/action/incident, from the Latin verb agere, to do/to lead/to put in movement, from the Proto Indo European root *ag-, to lead/to move.

Share in other languages:
Dutch: het aandeel
Spanish: el acción (f)
Italian: l´azione (f)


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