On The Corporation Supervisory System

Supervisory board, which emerges with the arising of incorporated corporation , is a legal, indispensable, and standing internal supervisory organ of a corporation. It is characterized by its legality, independence, specialization and authority. It functions as an organ protecting the general interests of a corporation, including the interests of shareholders, creditors, staffs, etc. The supervisory system of Continental Law System is represented by Germany and Japan. The systems of the two counties have both similarities and dissimilarities.The corporation supervisory board in China has many defects, in organization, legislation and law-enforcement mechanism, which results in the powerlessness of the supervisory board. Hence, some scholars hold the view that we should transplant the independent director system from U.K. and USA law families and replace the former supervisory system with it, while others suggest we should adopt the independent director system and supervisory system parallelingly. In the author's opinion, in order to solve the problem of ineffectiveness of corporation supervisory system in China, we should, on the basis of China's own reality, make the best use of the existing supervisory resources, adhere and preserve the existing supervisory system. To be more exact, we should reinforce the power of supervisory system, provide the supervisory board with independent legal status, specify the consultative means and voting procedures of supervisory board's meeting, perfect the legislation on supervisor's qualification, consummate the supervisor- appointment mechanism and clarify the obligation and responsibility of supervisors. This paper, from the perspective of incorporated corporation, starting from the general theory of supervisory system, explores the historical development, innovation and status quo of the supervisory system's legislation in the continental law family, and on the basis of the reality in our country, analyzes in detail the defects of the supervisory system and its causes from the angle of legislation, law-enforcement, etc. Finally the author puts forward several concrete suggestion on perfecting the supervisory system in China.