Jin Rong Shi Bao·2025-08-08 08:53Core Viewpoint - The implementation of the new Company Law in China has led insurance companies to abolish their supervisory boards, transitioning towards a more streamlined and efficient governance model [1][4]. Group 1: Changes in Governance Structure - China People's Property Insurance Company announced it will not establish a supervisory board, with the relevant powers transferred to the audit committee of the board of directors [1]. - Several insurance institutions, including listed companies and foreign insurance firms, have announced the dissolution of their supervisory boards this year [1]. - On July 30, China Pacific Insurance Group also confirmed it will no longer have a supervisory board, delegating those responsibilities to the audit and related party transaction control committee [1]. Group 2: Legal Framework and Implications - The revised Company Law, effective from July 1, 2024, allows state-owned companies to set up an audit committee within the board to exercise the powers of a supervisory board, eliminating the need for a supervisory board [3]. - The Financial Regulatory Bureau issued a notice in December 2024, clarifying that financial institutions can establish an audit committee within the board to perform the supervisory functions as per the new Company Law [4]. Group 3: Professional Oversight and Challenges - The audit committee, typically composed of independent directors, is expected to enhance financial oversight and compliance compared to traditional supervisory boards [4]. - However, independent directors may face challenges such as information asymmetry and insufficient time to fulfill their supervisory roles effectively [4]. - The cancellation of supervisory boards raises questions about maintaining oversight functions and balancing decision-making efficiency with power checks, which will need to be explored in practice [5].