Study of the Relationship between the Audit Committee and the Supervisory Board in the New Companies Act

Abstract

Proposed Amendments to the Company Law was considered and passed on December 29, 2023, marking an important update to the foundational law of China's modern enterprise system. The revision has made in-depth adjustments to issues that are not compatible and harmonized with the development, and seeks to provide a solid legal guarantee for the sustainable development of the market economy through the innovation of the corporate governance system. One of the highlights of this revision is the internal supervision and check and balance mechanism of the company, which introduces a brand-new internal supervision organization in Privately Owned Limited Liability Companies and Publicly Listed Joint-Stock Corporations, Including Wholly State-Owned Enterprises and the Audit Committee under corporate board is responsible for the internal supervision of the company. This major revision, the legislator breaks the traditional supervision two-tier system model, the introduction of a single-tier system supervision model, not only is the legislator of the traditional supervisory board and supervisors exercise of the company's internal supervision rights can not be fully and effectively perform their duties of the disappointment, but also released by the shareholders of the centralism to the director-centered signal.