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The legal Liabilities of China WFOE's Supervisor or the Board of Supervisors

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When setting up a wholly foreign-owned enterprise (WFOE or WOFE), you need to choose the right supervisor or the board of supervisors for your business.

In order to prevent the board of directors and managers from abusing their power and damaging the interests of the company and shareholders, it is necessary to elect such the special supervisory organ – supervisor or the board of supervisors to exercise supervision functions on behalf of shareholders.
The legal Liabilities of China WFOE's Supervisor or the Board of Supervisors

Supervisor or the board of supervisors

Article 51 of the company law stipulates that limited liability company shall have the board of supervisors, and its members shall not be less than three. A limited liability company with a small number of shareholders or a smaller company may set up one or two supervisors without a board of supervisors.

Supervisors shouldn’t be the legal representative, manager or other senior management person).

The term of the supervisor is three years. The term of the supervisor shall expire, and he may be re-elected.

Legal liabilities of China WFOE’s supervisor or the board of supervisors

The board of supervisors is the main form of supervision. In order to complete the supervision function, the board of supervisors should not only supervise the accounting, but also conduct business supervision.

The supervisor or the board of supervisors shall exercise the following functions and powers:

  • Checking the company's finance;
  • To supervise the conduct of directors and senior managers in performing the functions of the company;
  • Suggestions on the removal of directors and senior management personnel who violate laws, administrative regulations, articles of association or resolutions of the shareholders' meeting;
  • Ask for corrective action when the actions of the director or senior managerial personnel impair the interests of the company;
  • To propose the convening of a shareholders meeting;
  • To submit proposals to the meeting of shareholders;
  • To bring a lawsuit against a director or senior manager in accordance with the provisions of article 152 of this law;
  • Other functions and powers prescribed by the articles of association.

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