During the 16th century, trading expeditions were highly risky, with loss of life and cargo due to shipwreck and piracy extremely common. To encourage investors to put money into these ventures, governments would grant individual companies temporary monopolies over certain areas and routes.
The Dutch East India Company (Vereenigde Oostindische Compagnie, or VOC), which was established in 1602, was not the first of these. However, because of its size, it is often considered to be the world's first multinational company.
The VOC's charter granted it exclusive rights over any trade in Asia. To enforce this, it was allowed to raise a private army, build forts and even run its own judicial system and currency. However, Holland was not the only country exploring Asia.
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For example, England had formed the rival East India Company two years earlier. Many years of conflict between rival trading companies followed, but in 1620 the VOC's rivals agreed to stay away from Indonesia, leaving the VOC with a monopoly there. It also established bases in South Africa, India and Sri Lanka, as well as gaining exclusive rights to trade with Japan.
By the middle of the 17th century the VOC was the largest company in the world and immensely profitable. But its fortunes started to decline in the face of rising competition. In spite of this, the company stubbornly continued to pay dividends, forcing it to take on more debt.
By 1796 its financial situation was so bad that it was nationalised by the Dutch government in a failed effort to save it. Just three years later, in 1799, it was wound up.
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