China Company Registration/China Business Services
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A Supervisor is appointed to supervise the company’s operation and management.
The PRC Company Law requires any new company established on or after January 1, 2006 to set up a supervisor or a board of supervisors depending on the size of the company. Shareholders and employee representatives of a company can act as its supervisors. However, members of the company’s board of directors or senior management may not concurrently serve as supervisor. In the event of a board of supervisors, it must have a proportion of employee representatives which shall account for at least one-third of supervisory membership.
The main role of supervisor is to safeguard and supervise the smooth and lawful operation of a company. For this purpose, the law has delegated supervisor a board rang of rights, such as inspecting the company’s finances, supervising the company directors and senior managers, recommending dismissal of directors or senior managers who violate laws, regulations, the company’s articles of association, or shareholders’ resolutions, demanding directors or senior managers to make corrections if their actions will cause damage to the company, proposing interim shareholders’ meetings, making proposals at the shareholders’ meeting, initiating legal action against directors and senior managers, attending and speaking at the meetings of the board of directors and initiating investigations if s/he finds “unusual” circumstances in the company’s operations. The expenses which are necessary for supervisor to perform his/her duties will be borne by the company. A supervisor bears the obligations of fidelity and diligence to the company and may not take any bribe or other illegal gains by taking the advantage of his/her powers, or encroach on the property of the company.
The supervisor of the Company may exercise the following powers:
(a) to check the financial affairs of the company;
(b) to supervise the duty-related acts of executive director and senior managers, to put forward proposals on the removal of executive director or senior manager who violates any law, administrative regulation, the articles of association or any resolution of the shareholder;
(c) to demand executive director or senior manager to make corrections if his act has injured the interests of the company; The executive director and senior manager can not take the position of Monitor.
(d) to investigate the company operation status;
(e) to initiate litigation against executive director or senior managers in accordance with the Company Law if the executive director or senior managers break the laws
Since supervisor also plays an important role in safeguarding the smooth operation of a company, the law has also imposed the same qualification requirements of being a supervisor of a company as those on legal representative of China Company.
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