A supervisor is a compulsory position required by the Company Law in China. When setting up a foreign invested enterprise (FIE), you need to choose the right supervisor or the board of supervisors for your business. In order to prevent the board of directors and managers from abusing their power and damaging the interests of the company and shareholders, it is necessary to elect such the special supervisory organ - supervisor or the board of supervisors to exercise supervision functions on behalf of shareholders. The following are the basics about supervisor.
1. Number and composition
Every company in China must have one to two supervisors/a board of supervisors (no less than three members). The board of supervisors shall appoint a chairman.
2. Term of appointment
The term of appointment of a supervisor shall be three years. Upon expiry of the term of appointment, a supervisor may be re-elected.
3. Duties and powers
A board of supervisors or a supervisor shall exercise the following duties and powers in accordance with Company Law and others stipulated in the articles of association of the company.
4. Meeting of the board of supervisors
The board of supervisors shall convene at least one meeting every year; a supervisor may propose to convene an ad hoc meeting of the board of supervisors.
5. Qualifications and obligations
Not any person can act as a supervisor. Directors and senior management personnel shall not hold the post of supervisor concurrently. The supervisor or the board of supervisors shall exercise the following functions and powers:
(1) Check the company's finance;
(2) Supervise the conduct of directors and senior managers in performing the functions of the company;
(3) Advise on the removal of directors and senior management personnel who violate laws, administrative regulations, articles of association or resolutions of the shareholders' meeting;
(4) Ask for corrective action when the actions of the director or senior managerial personnel impair the interests of the company;
(5) Propose the convening of a shareholders meeting;
(6) Submit proposals to the meeting of shareholders;
(7) Bring a lawsuit against a director or senior manager in accordance with the provisions of article 152 of this law;
(8) Other functions and powers prescribed by the articles of association.
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