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Board of Supervisors and the Management

The operation of the company must be conducted in a proper and orderly way according to relevant rules. The company must make correct decisions and the leadership must fulfill its duty correctly. Abuse of power must be prevented to avoid harm to the interests of the company, its shareholders, or a third party. In order to ensure all of the above, various countries provide for the establishment of supervisor positions or a board of supervisors in a company. The board of supervisors is a standing supervisory body under the shareholders' assembly that fulfills the function of supervision. The board of supervisors exists in parallel with the board of directors. It independently exercises its power in supervising the board of directors, the general manager, senior staff, and the management of the entire company. In order to ensure the independence of the board of supervisors from the board of directors, a supervisor shall not serve concurrently as a director or manager. The board of supervisors is responsible to the shareholders assembly and comprehensively supervises the operation and management of the company. This includes investigating and reviewing the condition of the company's business, examining various financial issues, reporting to the shareholders assembly or the board of directors, overseeing the behaviors of company officials at all levels, providing suggestions regarding the engagement and dismissal of leaders and officials of the company, and overseeing the plans and decisions of the company and their implementation.

The United States does not mandate the establishment of a board of supervisors in public companies, including investment banks. In place of a board of supervisors, the functions of auditing and supervision are usually partly fulfilled by independent directors or an audit committee or an investigation and inspection committee under the board of directors.

For the managers of an investment bank in mature international markets, their management tactics, operational activities, and the final operational performance are subject to the judgment of the market. Investors eventually vote based on their judgment, albeit in a different way of voting. Bad performance of the company and declining share prices might lead to career risks for the managers that could get them replaced. This constitutes very good external market restraints on abuse of power and insider control by managers.

Functional Divisions

The organizational structures of functional divisions in investment banks in mature international markets are somewhat complex, with various methods of labor division. However, three basic divisions are identifiable: the capital market division, the consumer market division, and the research division. Of these, the capital market division covers all traditional investment banking business and corporate financial business. It is the organizational form that is largely consistent across investment banks in mature international markets. The consumer market division has to do with the distribution and sale of various securities, covering the whole process from the creation of new financial products to the operation and management of the branching system. It is closely related to mainstream investment banking in terms of securities provision and distribution methods. The research division is a high-caliber research body set up by an international investment bank above and independent of the capital market division and the consumer market division. A direct responsibility system is adopted in the research division. Its most important task is to study and develop global funds and fixed revenues.

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