Investor as Oversight Authority

“Another important duty of an investor is to monitor and oversee the operation of the invested companies. Investors entrust operators with the business management to maximize returns on their investments. Therefore, overseeing whether management is proper is a significant role.”

“The separation of investors and managers was formalized with the establishment of the British East India Company in 1600. The company adopted a model where outside investors provided funds for each voyage. In its first voyage in March 1601, 215 investors raised 68,373 pounds. The voyage was successful, and all sales were returned to the investors. However, returning all sales meant that new investments had to be solicited for each voyage. Therefore, from 1657, it switched to a model where only profits were distributed to shareholders, aiming for continuous operation, and adopting a general meeting system that allowed investors to participate in management, laying the foundation of the modern corporation.”