What Is a Supervisory Board?

According to the provisions of Chapter IV, Section 4 of the "Company Law of the People's Republic of China" ^[1] , the Supervisory Board is composed of supervisors elected by the shareholder (large) committee and supervisors democratically elected by the company's employees. Statutory mandatory and permanent establishments for inspection.

According to the provisions of Chapter IV, Section 4 of the "Company Law of the People's Republic of China" ^[1]

As the company's shareholders are scattered, expertise and capabilities vary widely, and opportunities and channels to participate in the company's daily operations and management are limited. In order to prevent the board of directors and managers from abusing their powers and damaging the interests of the company and shareholders, it is necessary to set up such a special supervision agency to perform supervision functions on behalf of shareholders.

(1) Independence of supervision functions.

(2) Legality of supervision functions.

(3) The specificity of the supervisory function.

Article 51 of the "Company Law" stipulates: "A limited liability company shall have a board of supervisors with at least three members.

The members of the supervisory board should usually be natural persons with full capacity, but some countries allow legal persons to serve as supervisors. China's "Company Law" stipulates that the supervisor's qualifications for positive and negative appointments are the same as directors, but directors and senior managers must not concurrently serve as supervisors.

The term of office of the supervisors is three years. The term of the supervisors expires and they can be re-elected.

If the term of the supervisor is not re-elected in time, or if the resignation of the supervisor during the term of office leads to less than the quorum, the original supervisor shall still perform the duties of supervisor in accordance with the laws, administrative regulations and the articles of association of the supervisor before the newly elected supervisor takes office.

The reasons and methods for the resignation and removal of members of the Supervisory Board are basically the same as those of the directors, that is, the supervisors naturally retire at the end of their term. Supervisors may also be dismissed for disqualification. ^[4]

The supervisory board (or the supervisor of a company without a supervisory board) exercises the following powers:

(A) Inspection

Rules of Procedure of the Supervisory Board

1. Convening and presiding of the supervisory board

The meetings of the board of supervisors shall be convened and presided over by those who have the right to convene.

The board of supervisors is responsible to the shareholders (large) committee. Correct

The main form of supervisory board supervision. In order to complete the supervisory function, the board of supervisors must not only perform accounting supervision but also business supervision. There must be not only after-the-fact supervision, but also before-and-after supervision (ie, supervision during planning and decision-making). The supervision of the Board of Supervisors on business management includes the following:

The first is to notify the management organization to stop its illegal acts. Violates the law when directors or managers perform business,

Articles 51-56 of the Company Law provide for the board of supervisors of limited liability companies, articles 117 to 119 provide for the board of supervisors of joint stock limited companies, and article 70 provides for the board of supervisors of wholly state-owned companies. See details below:

Provisions on limited liability companies

Article 51

A limited liability company shall have a board of supervisors with at least three members. A limited liability company with a small number of shareholders or a small scale may have one or two supervisors without a supervisory board.

The board of supervisors shall include shareholder representatives and an appropriate proportion of the company's employee representatives, of which the proportion of employee representatives shall not be less than one-third, and the specific proportion shall be prescribed by the company's articles of association. The employee representatives on the supervisory board are democratically elected by the company's employees through the employees 'congress, the employees' congress, or other forms of democratic election.

The Supervisory Board has a chairman, elected by more than half of all supervisors. The chairman of the board of supervisors shall convene and preside over the meetings of the board of supervisors; if the chairman of the board of supervisors is unable to perform his or her duties, more than half of the supervisors shall jointly recommend one supervisor to convene and chair the board of supervisors.

Directors and senior management personnel shall not concurrently serve as supervisors.

Article 52

The term of office of the supervisors is three years. The term of the supervisors expires and they can be re-elected.

If the term of the supervisor is not re-elected in time, or if the resignation of the supervisor during the term of office leads to a lower than the quorum of the members of the supervisory board, the original supervisor shall still perform the duties of supervisor in accordance with the laws, administrative regulations and the articles of association of the company before the re-elected supervisor takes office.

Article 53

The supervisory board and the supervisors of a company without a supervisory board exercise the following functions and powers:

(1) check the company's finances;

(2) Supervising the performance of directors and senior executives in the performance of company duties, and recommending removal of directors and senior executives who violate laws, administrative regulations, the company's articles of association or resolutions of shareholders' meetings;

(3) When the actions of directors and senior management personnel harm the interests of the company, they are required to correct them;

(4) It is proposed to convene an extraordinary shareholder meeting to convene and preside over a shareholder meeting when the board of directors fails to perform the duties of convening and chairing a shareholder meeting as required by law;

(5) submit proposals to the shareholders' meeting;

(6) to institute proceedings against directors and senior management personnel in accordance with the provisions of Article 151 of this Law;

(7) Other functions and powers stipulated in the company's articles of association.

Article 54

Supervisors may attend board meetings and make inquiries or suggestions on matters resolved by the board.

The board of supervisors and the supervisors of the company without a board of supervisors may conduct investigations when they find that the company is operating abnormally; if necessary, they may employ an accounting firm to assist them in their work, and the company shall bear the expenses.

Article 55

The board of supervisors meets at least once a year, and supervisors may propose to convene a meeting of the board of supervisors.

The methods of deliberation and voting procedures of the board of supervisors shall be prescribed by the articles of association of the company, except as provided for in this law.

Supervisory Board resolutions shall be approved by more than half of the supervisors.

The board of supervisors shall make minutes of the decisions on the matters discussed, and the supervisors present at the meeting shall sign the minutes.

Article 56

The expenses necessary for the supervisors of the board of supervisors and the supervisors of a company without a supervisory board to exercise their functions and powers shall be borne by the company.

Regulations on wholly state-owned companies

Article 70

The members of the board of supervisors of a wholly state-owned company shall not be less than five, of which the proportion of employee representatives shall not be less than one-third, and the specific proportion shall be prescribed by the articles of association of the company.

The members of the Supervisory Board are appointed by the State-owned Assets Supervision and Administration Institution; however, the employee representatives of the members of the Supervisory Board are elected by the company's staff representative conference. The chairman of the board of supervisors is designated by the state-owned assets supervision and management institution from among the members of the board of supervisors.

The board of supervisors exercises the functions and powers specified in Article 53 (1) to (3) of this Law and other functions and powers specified by the State Council.

Provisions on joint stock companies

Article 117

A joint stock limited company shall have a board of supervisors with at least three members.

The board of supervisors shall include shareholder representatives and an appropriate proportion of the company's employee representatives, of which the proportion of employee representatives shall not be less than one-third, and the specific proportion shall be prescribed by the company's articles of association. The employee representatives on the supervisory board are democratically elected by the company's employees through the employees 'congress, the employees' congress, or other forms of democratic election.

The Supervisory Board has a chairman and may have a vice-chairman. The chairman and deputy chairman of the board of supervisors are elected by more than half of all supervisors. The chairman of the board of supervisors shall convene and preside over the meeting of the board of supervisors; if the chairman of the board of supervisors fails to perform his or her duties, the vice chairman of the board of supervisors shall convene and preside over the meeting of the board of supervisors; if the vice chairman of the board of supervisors fails to perform his or his duties, more than half of the supervisors will jointly recommend a supervisor to convene and Preside over meetings of the Supervisory Board.

Directors and senior management personnel shall not concurrently serve as supervisors.

The provisions of Article 52 of this Law on the term of office of the supervisors of a limited liability company shall apply to the supervisors of a company limited by shares.

Article 118

The provisions of Article 53 and Article 54 of this Law on the functions and powers of the board of supervisors of a limited liability company shall apply to the board of supervisors of a company limited by shares.

The expenses necessary for the supervisory committee to exercise its functions and powers shall be borne by the company.

Article 119

The Supervisory Board meets at least once every six months. Supervisors may propose to convene a meeting of the supervisory board.

The methods of deliberation and voting procedures of the board of supervisors shall be prescribed by the articles of association of the company, except as provided for in this law.

Supervisory Board resolutions shall be approved by more than half of the supervisors.

The board of supervisors shall make minutes of the decisions on the matters discussed, and the supervisors present at the meeting shall sign the meeting minutes. ^[3]

Model Supervisory Board Resolutions

Supervisory Board meeting time: XX, XX, 200X

Meeting place of the Supervisory Board: No. XX Road, XX District, XX City (XX Meeting Room)

Nature of the Supervisory Board Meeting: The First Supervisory Board Meeting

Attendees of the Supervisory Committee: (all supervisors),. (Additional explanation, meeting notice and attendees)

According to the Company Law of the People's Republic of China, XXXX Co., Ltd. convened the first meeting of the Supervisory Board. Supervisors elected at the first shareholder meeting ×××, ×××, ×××, ××× and democratically elected supervisors ××× (, ×××) attended the meeting of the Supervisory Committee. Convened and chaired, unanimously adopted the following resolutions:

Election ××× as the chairman of the first board of supervisors.

(Signed) All Supervisors of XXXX Co., Ltd .:

×××, ×××, ×××

XX April XX 200X

Note: The resolution of the Supervisory Board is only applicable to the resolution of the first Supervisory Board of the limited company.