Study Of Internal Oversight Bodies Of Listed Companies In China

As the highest form of enterprise organizations, the separation of ownership and management character of modern listed companies can avoid the control of the company's operations by the original providers of the company's property, it also can improve the efficiency of the company's decisions and reduce the costs of making decisions, but it leads to an inconsistent share of property rights, that means the board of directors has the power of making its own decisions, while the shareholders have to bear the consequences of their decisions, which makes the abuse of power possible and the internal supervision necessary.In reality, China's capital market creates a strong board under the dorminance of powerful shareholder. In such circumstances, the board of directors and managers enjoy a great power without borders, but the function of board of supervisors is weakened or even reduced to none and the effect of independent directors is not as powerful as it is supposed to be, which obstructs the further improvement of Chinese listed companies. Therefore, based on the successful extraterritorial legislation in the same area and the actual situation in China, the reconstruction of internal power order could strengthen internal supervision of listed companies.Firstly, This paper cites detailed analysis of the extraterritorial models about internal supervision, which is an inspiration to our chosen for the internal supervision organs. Secondly, this paper introduces the current situation of internal supervision mechanism in domestic listed companies and carries out an in-depth analysis of the reasons for failure. We also introduce the shortcomings of legislation and the conflicts in pratice of these organs, then make it clear that there is a phenomenon of "the reversal of power level" of three organs which are general meeting of shareholders, board of directors and board of supervisors in listed companies. The reversal is the major reason of the paralyzed or semi-paralyzed internal supervision system. Finally, according to a path-dependent changes and the actual situation of corporate governance environment in China at the present stage, this paper focuses on how to solve the problems of the internal supervising organs of the domestic listed companies in law, how to arrange the internal supervising functions and improve their coordination between the board of supervisors and independent directors.