Core Viewpoint - The governance structure of listed companies is undergoing a significant transformation driven by the new Company Law and accompanying regulations from the China Securities Regulatory Commission (CSRC) [1][2] Regulatory Policy Support - The transformation is initiated by the revised Company Law, effective from July 1, 2024, allowing companies to establish an audit committee under the board of directors to assume the functions of the supervisory board, eliminating the need for a supervisory board [2] - The CSRC has issued several supporting policies to align with the new Company Law, including guidelines for company charters and shareholder meetings, with a final adjustment deadline set for January 1, 2026 [2] - Major pharmaceutical companies such as Shanghai Pharmaceuticals, Baiyunshan, and Sinopharm have announced amendments to their company charters to abolish the supervisory board [2] Streamlined Governance Structure - The cancellation of the supervisory board aims to optimize the governance structure through the professional advantages of the audit committee, enhancing operational efficiency [3] - The overlap in functions between the supervisory board and the audit committee has led to resource waste and increased communication costs; consolidating these functions is expected to speed up decision-making and align supervision with actual operations [3] - The audit committee's professional adaptability is particularly crucial in the fast-evolving and highly regulated pharmaceutical industry, allowing for better management of financial conditions, compliance, production quality, and sales risks [3] Enhanced Substantive Supervision - The governance structure change aims to shift corporate supervision from "formal compliance" to "substantive effectiveness," with the audit committee playing a key role in ensuring financial integrity and risk management [4] - A well-staffed audit committee can rigorously oversee financial conditions and internal controls, providing reliable information for investors and promoting sustainable corporate development [4] - The audit committee is expected to proactively identify and address potential risks, particularly in areas like technological innovation and market expansion within the pharmaceutical sector [4] Future Goals - The abolition of the supervisory board is just the starting point; the core goal is to establish a high-level, risk-matched supervisory system [5] - As the audit committee continues to improve in terms of talent composition and operational mechanisms, pharmaceutical companies are expected to enhance compliance and unleash innovation potential, contributing to high-quality industry development and public health initiatives [5]