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motivated by factors that had nothing to do with the supply of capital or the cooperation of insiders and outside investors. The VOC was formed in order to assure continuity, from voyage to voyage, in the flow of commodities between Asia and Europe; to coordinate among competing Dutch city-based companies; and to overcome Portuguese and English competition. The institutional reorganization had a negative effect on the ability to raise capital.

As we saw, passive investors were asked to put in their money in annual installments over a four-year period. These installments may have conveyed to the passive investors that it was business as usual despite the formation of the VOC, and that they were still investing per voyage. But, in fact, they were not. They were locked in. They could not withdraw their money at the end of every year or every voyage. Further, once they had subscribed, they were legally obliged to pay all four installments in full, irrespective of the performance of the VOC. As described above, even when the VOC was doing well and making profits, its dividend policy was very restrictive. The active shareholders retained control of the joint-stock capital of the VOC through the City Chambers and the Heren XVII for no less than 10 years. They offered passive investors no voting rights, no information on trade, no account of profits and thus no share in control. The active shareholders used their positions as both merchants and city magistrates to exercise political influence on provincial and federal governments and to unilaterally lock in the external investors by way of the Charter. They could, and in fact did, lock-in the passive investors again at the end of the 10-year period by using their political clout to amend the terms of the original Charter and extend the duration of the joint stock.

Table 3: Lock-In of Investors



One voyage (2-3 years)

10 years (and further extension)

Voluntary investment

Politically induces investment

In return: Voting rights, information, exit at end of voyage

No voice or information. Partial commitment to dividends.

In practice: Also exit through privately matched transactions

To preempt protest: Secondary stock market exit option  

Sources: See text

Once locked in, the passive investors became dissatisfied and agitated. They were dissatisfied with their legal status. But many of them were also dissatisfied because they realized that the VOC did not aim only at maximizing profits and returns. The VOC was also used by the financial-political elite to promote the military, religious and political aims of the Republic and the leading provinces ((Adams 2005) pp. 52-61). The VOC financed armed ships to attack the Spanish-Portuguese fleet in the Indian Ocean and capture territorial strongholds. The passive investors sensed that profits were compromised at the expense of political aims. It was not easy for them to organize. But in time, they protested the fact that they were locked in as well as their lack of voice and information, and demanded generous dividends and democratizing reform in the governance structure of the corporation (den Heijer 2005; Gepken-Jager 2005). On these two fronts, they did not achieve much; however, they were more successful with the exit option.

We don't know of significant trading in shares of pre-companies, probably for two main reasons: the pre-companies were limited in time to one venture, and the number of members of each was small and they were personally connected and unwilling to include outsiders. The VOC was a much larger and more impersonal enterprise. Its shares were not bearers’ and no certificate was issued to holders (van Dillen 1958) pp. 32-34). Thus, no physical asset was conveyed by private contract. However, its Charter included a clause that allowed transfer by registering

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