Di Yi Cai Jing·2025-08-07 12:29Core Viewpoint - The gradual phasing out of the supervisory board in corporate governance is driven by the implementation of the new Company Law in 2024 and regulatory guidance, leading to the transfer of supervisory responsibilities to the board's audit committee and employee directors [2][3][5]. Group 1: Changes in Corporate Governance Structure - As of August 7, 2023, 18 listed banks have announced the cancellation or advancement of the supervisory board, following the trend initiated by major state-owned banks [2][3]. - The new Company Law allows joint-stock companies to replace the supervisory board with an audit committee, which is expected to enhance corporate governance efficiency [6][7]. - The shift indicates a significant change in the governance structure that has been in place for nearly 30 years, with the supervisory board's functions being integrated into the audit committee [3][5]. Group 2: Challenges and Implications - The independence of the audit committee is identified as a key challenge in the new governance framework, as it must effectively take on the supervisory roles previously held by the supervisory board [7][8]. - There are concerns regarding the potential for self-supervision if the audit committee is solely accountable to the board, which could undermine its effectiveness [7]. - The reform necessitates that independent directors with financial and risk management expertise be appointed to ensure the effectiveness of the audit committee's oversight [7][8]. Group 3: Historical Context and Evolution - The supervisory board was established in 1993 as part of a three-tier governance structure, but its effectiveness has diminished over time, leading to a perception of it being a mere compliance entity [5][6]. - The establishment of the Central Audit Committee in 2018 has further externalized traditional supervisory responsibilities, reducing the necessity for an internal supervisory board [4][5]. - The transition from a supervisory board to an audit committee reflects a broader trend towards streamlining governance structures and enhancing operational efficiency within banks [7].