Under the joint stock company system, ultimate control over management is derived from the effective rate of shareholding. In colonial India, the joint stock company system was widely used from the mid-nineteenth century; however, control was considered to come not from the effective rate of shareholding but from the managing agency contract that guaranteed practical control to a managing agent, typically a business group that had far-reaching influence over business enterprises. Based on archival evidence, this paper clarifies that fundamental control was derived from dominant shareholding. This finding has two implications. First, the significant role of the rate of shareholding implies that managing agents had a keen interest in the value of share capital of the joint stock companies. Second, this significant role also implies that managing agents attempted to hold the dominant portion of shareholdings to keep control over their companies.
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