|
Furthermore, it should be noted that, with the development of legal system in China, considerable of newly imported laws and systems have sprung up in recent years. A close watch to our legislation, it is not difficult to find that some of these laws and regulations fail to substantially carry out. Some provisions even never be applied by the judge so that they become “castle in air”. It is contrary to the principle: “Ensure that the laws are strictly observed” (you fa bi yi ) embedded in Chinese legal system. This is an urgent but easily neglected problem.
In this dual supervisory mechanism, should one of them take precedence over the other in the process of supervision? Some people have suggested that the supervisory board should be given more substantial power. [FN13]However, the writer respectfully disagrees, and holds the view that under this dual supervisory mechanism in the listed companies of China, on the ground that the two systems bear their unique functions in the corporate governance, what seems to be important is to deal with coordination and harmonization of the supervisory board system and independent director system, rather than favoring one of them and neglecting the other. Therefore, the core purpose of this article is to try to make some contributions to coordination of the two systems by providing hopefully helpful suggestions. The following will analysis how to coordinate the two systems from a comparative angle.
First of all, examination will be concentrated in the harmonization of supervisory scope and duties. As a statutory agency of listed companies in China, the supervisory committee aims to check the state of company’s operation, especially to supervise the financial affairs by reviewing financial report, to monitor the duty-related acts of the directors and senior managers. [FN14] Based on supervisors’ characteristics, it can be concluded that the supervision from supervisors emphasizes on whether the day-to-day operation of the company and the directors’ behavior violate relevant laws and article of association. Generally speaking, it does not touch on one decision or policy made by the management board reasonable or not. Compared with the directors’ board members, supervisors are outside people safeguarding the order. They serve for the long term benefits of the company.
While independent directors take a unique position within the company, because they wear two hats at the same time----one as director, one as supervisor. Therefore, they may enjoy two different kinds of powers. On the one hand, as members of the management board, they have the right to participate in decision making of the company, and have access to accurate, relevant and timely information just as other regular directors do; On the other hand, as a role of supervision, they are endowed with a range of rights to fulfill their responsibilities.
To draw a comparison, independent director’s supervision is more timely, broad-spectrum than supervisors’ supervision because independent directors’ supervision is with more extensive coverage, not limited to validity of the company’s business , but also related to the decision’s rationality of the board. Based on the analysis above, it is not surprised to meet the discrepancy that both parties have the obligation to check the financial report of the company. The writer sees that it is helpful to carry out the double financial audit system. But their scope of liabilities should be clarified and follow certain standard. Taking all the relevant elements into account, the writer suggests that the supervisory committee should be responsible for insuring the business is in compliance with laws, regulations and articles of association. Whilst the independent directors assume both validity and rationality of the company’s operation, with emphasis on the latter. Through information circulation and cross-review, this arrangement will bring transparency and openness to both sides’ vocational work, and further turn corporate governance’s quality to good account. Even better, it wisely provides checks and balances between the supervisory committee and independent directors. Nominal supervisors would be exposed to the public. Lastly, if there is a conflicting result of financial examination conducted by the two supervisory parties, the result should be proposed to the shareholders’ assembly for disclosure, and finally given a decision by the shareholders’ assembly.
|
