However, by 1560, the Casa's finances were in dire straits and in 1570, King Sebastian of Portugal issued a decree opening up trade to India to any private Portuguese national.

This was promoted by Portuguese New Christian merchant and Mercantilist pamphleteer Duarte Gomes Solis who lived in Madrid, most notably in his Spanish language tract Discursos sobre los Comercios de las Indias (published 1622, although circulated earlier).

Solis argued that a private joint-stock company could raise more capital, revive the Asian trade and compete more efficiently with the Anglo-Dutch in the Indian Ocean.

King Philip III of Portugal put the idea in motion in 1624 and appointed D. Jorge Mascarenhas, mayor of Lisbon and member of the Council of State, to head a committee to implement Solis proposal.

Despite being supported by Olivares, the proposal faced much skepticism and opposition, particularly by the Duke of Villahermosa (head of the Council of Portugal), and Mascarenhas had considerable trouble securing investment commitments.

Although there were provisions against allowing any other East Indies company to be formed in Habsburg territories, investment in the Companhia was open to all subjects of Philip III and his allies (thus Spaniards, Italians, Flemings, etc.)