China's Terms Of Reference Of The Supervisory Board Study

The administration construction of modem companies differs from that of traditional enterprises,based on the distribution and restriction of the power. The shareholder general meeting, the director board and the supervisory committee consist of modem company's main systems. The reasonability of their arrangement and effective operation has a great impact on the profit and existence of the company. The supervisory committee, as a special supervising body,can effectively prevent power abuse of the board of directors, secure investment gains for shareholders and rights of corporation creditors.This paper mainly introduces the basis of the theory of the supervisory committee. According to the analysis of the condition of the supervisory committee in main civil law countries, such as Germany and Japan, the paper analyzes the condition of the supervisory committee in our country , and meanwhile, classifies the reason why the supervisory committee can not perform the right effectively, which leads to the invalid supervision from the prospective of the traditional view, the existing system and the defects of the legislation. Finally the paper suggests several proposals for improving the authority of the supervisory committee.In structure, the paper is divided into 4 parts, as followings:First, the foundation of the supervisory committee system and its value and function. The paper mainly discusses the theory of cost, the theory of distribution and restriction of the right and the theory of ownership of the investigators. Furthermore it analyzes the impact these theories bring to the formation and the development of the system of the supervisory committee.Second, the comparison of the right of the supervisory committee in civil law countries. Through comparing to the legislation on the supervisory committee, it concludes that to perform the supervision mission effectively, the legislation must stipulate that (1) the supervisory committee should have the material right to supervise the director board; (2) the supervisory committee should have the timely information and sufficient funds; (3) the supervision from the outside should have great influence.Third, the analysis of the existing condition of the supervisory committee in our country. According to the investigation by the Nan Kai University on the administration of companies whose share can be exchanged in the stock market, the paper has the conclusion that the right of the supervisory committee can not guarantee the supervision to the influential decision by the company. From the prospective of the binding of the traditional view, the defects of the existing system and the defect of the company law, the paper discusses the reason of the invalid setting of the supervisory committee. Meanwhile, it compares the right of the supervisory committee to that of the independent director. Because the rights of the two parts have some overlap, which may lead to detrimental effect, the paper emphasizes that it should have a clear classification between the two in the legislation.Fourth, the improvement of the right of the supervisory committee in our country. According to the system of the supervisory committee in civil law countries, the paper suggests several proposals for improving the condition of the supervisory committee, as followings: (1) enlarge the right of the supervisory committee; (2) improve the cooperation of the right between the supervisory committee and the independent director, (3) improve the encouragement and restriction system of the performance of the right of the supervisory committee.