CHINA Law and Practice Contributed by: Kevin Wang, Global Law Office
In 2024, China’s stock exchanges issued more specific requirements on the sustainable devel - opment report for publicly traded companies. A combination of mandatory disclosure and vol - untary disclosure should be adopted for ESG reports, and violations may cause regulatory or disciplinary actions. 3. Management of the Company 3.1 Bodies or Functions Involved in Governance and Management In China, the principal bodies involved in the gov - ernance and management of a company include the shareholder meeting, the board of directors, the board of supervisors and the manager. • The shareholder meeting is the key organ of authority, responsible for making decisions on fundamental issues and electing the main members of the board of directors and the board of supervisors. • The board of directors is the executive func - tion in corporate governance. The managers are appointed by the board of directors and the managers’ functions are defined in the articles of association. Depending on their relevant authorities in this executive function, directors or managers may hold the central position in the company’s day-to-day deci - sion-making process. • The board of supervisors is the supervisory organ, responsible for supervising the execu - tion of business and the company’s financial status. Without the board of supervisors, the company may also set up an audit commit - tee in the board of directors to exercise the same functions and powers, in which case the board of directors actually has the super - visory responsibilities.
In general, the new company law allows the removal of supervisors from the corporate gov - ernance structure. It may also, however, raise the concern of self-supervision by the board of directors itself, leaving an open question on how to balance the board’s power in such structure. 3.2 Decisions Made by Particular Bodies Decisions of the Board of Directors The board of directors shall decide on the fol - lowing matters: • determining the company’s business plans and investment programmes; • determining the establishment of the com - pany’s internal management departments; • formulating the company’s basic manage - ment system; and • deciding on the hiring or dismissal of the managers and their remuneration. The new Company Law deletes the board’s function of formulating plans in respect of the company’s annual budget and final accounts, which gives the company a discretion to transfer this function from the board of directors to the senior managers by an elaboration in its articles of association. In addition, the board of directors shall exercise other powers prescribed by the articles of asso - ciation and empowered by the shareholders’ meeting. Powers That the Shareholders’ Meeting can Give to the Board of Directors Based on the empowerment by the sharehold - ers’ meeting, the board of directors can decide on the following matters. The below resolutions shall be adopted by a majority of all the directors:
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