A chartered company is an association formed by investors or shareholders for the purpose of trade, exploration, and colonization.
Companies enabled merchants to band together to undertake ventures requiring more capital than was available to any one merchant or family. From the sixteenth century onwards, groups of European investors formed companies to underwrite and profit from the exploration of Africa, India, Asia, the Caribbean and North America, usually under the patronage of one state, which issued the company's charter. But chartered companies go back into the medieval period. Authorizations of charters enabled even small states to greatly augment their influence by indirect rule, steering private resources into national pursuits of exploration and trade. As they grew wealthier, some companies developed extensive administrations for their ventures, and frequently conducted local affairs with little homeland oversight.
Chartered companies were usually formed, incorporated and legitimised under a royal or, in republics, an equivalent government charter. This document set out the terms under which the company could trade; defined its boundaries of influence, and described its rights and responsibilities.
For example, the charter of the British South Africa Company, given by Queen Victoria, allowed the company to:
In return, the British South Africa Company agreed to develop the territory it controlled; to respect existing African laws; to allow free trade within its territory and to respect all religions.
Chartered companies in many cases benefited from the trade monopolies (such as the English Royal African Company, which held a monopoly on African slaving from 1672 to 1698).
To carry out their many tasks, which in many cases included functions – such as security and defence – usually reserved for a sovereign state, some companies achieved relative autonomy. A few chartered companies such as the British Honourable East India Company (HEIC) and Dutch Verenigde Oostindische Compagnie (VOC) had military and naval forces of their own that dwarfed even the average European state's armed forces, and adequate funds to buy the best men and equipment, in effect making them a state within a state.
More chartered companies were formed during the late nineteenth century's "Scramble for Africa" with the purpose of seizing, colonising and administering the last 'virgin' African territories, but these proved generally less profitable than earlier trading companies. In time, most of their colonies were either lost (often to other European powers) or transformed into crown colonies. The last chartered company to administer territory directly in Africa was the Companhia de Moçambique in Portuguese East Africa (now Mozambique), which handed over rule of the colonies of Manica and Sofala to the Portuguese republic's colonial government in 1942.