Study On Improvement Of The Functions Of Supervisory Board Of NEWCAPEC Corp

Supervisory Board is an integral part of a company’s governance structure. As a legal internal supervising organization, an effectively running Supervisory Board will be an effective mechanism that prevents the arbitrary decisions made by Board of Directors. It is also an important step to protect the lawful rights of shareholders and company’s other stakeholders. However, the reality is that Supervisory Board is always but an empty shell, and cannot play the real role in supervising.From the falls of a large number of senior executives from many public companies, one can tell that Supervisory Board did not fulfill the noble responsibilities entrusted by law. Neither did it find or stop the illegal activities before it was too late.Although imperfect legislation and unsound company mechanism, to some extent, contributes to the sad result, the reality of short-handedness is also a practical difficulty.Newcapec is a privately-owned enterprise that has gone public. Supervisory Board has been playing a critical role in company management. Nonetheless, there are still some problems in the governance of the company and the mechanism of Supervisory Board.I have been holding the post of President of Supervisory Board for years, and well understand the problems in the operation of Supervisory Board and the difficulties of exercising its authorities. By analyzing the problems in the operation of Supervisory Board, I found out the position of Supervisory Board in the company is a lot different from that defined in the Corporation Law. The independence of Supervisory Board is constrained and influenced by directors and managers, and that leads to the lack of initiative in executing its duties. The functions of Supervisory Board have been weakened and need to be improved.Based on the problems in the company’s development and the operation of Supervisory Board, as well as the needs for Supervisory Board’s supervision for the company, I compared the legal definitions of Supervisory Board and the legal safeguards for executing its duties in different countries, and discovered the gap between Newcapec’s reality and them. Targeting at current defects and deficiencies, I analyzed the weak links in Newcapec’s current institutional and organizational structures and related regulations. I suggest by reinforcing the responsibilities and duties of Supervisory Boardin its Article of Association, motivate Supervisory Board members’initiatives to exercise their duties, and guarantee Supervisory Board effectively exercise its power of supervising and managing.In the current Corporation Law in China, the definition of Supervisory Board’s responsibilities and duties and relevant regulations are too general. In regard to this fact, I suggest the companyeliminate Supervisory Board members’worries behind and enable them to effectively and legally exercise their power of supervising and managing by1) refining the responsibilities and duties in its Article of Association,2) assigning duties to Supervisory Boardin its Article of Associationby detailed measures and responsibilities that are not clearly defined in Corporation Law,3) clarifying concrete methods and measures of exercising its power,4) standardizing the protective measures for Supervisory Board to exercise its power,5) establishing an oversight mechanism to monitor Supervisory Board.By improving incentives, the company can motivate Supervisory Board members’initiative and enthusiasm to exercise their duties, and therefore improve the Supervisory Board’s performances. Based on the current situation of Supervisory Board, I tried to sort out the reasons, analyze the countermeasures, and discuss the legal basis and feasibilities of the measures that Newcapec has taken, as well as the bold efforts and experiments Newcapc has made, in the hope that related enterprises can draw lessons from Newcapec.