Since shares company is a separation of ownership and management of such kind corporate organization, its business decision-making power is concentrated in the hands of a member of the Board of Directors, management of daily affairs is more concentrated in the appointed manager who is empowered by the Board. Therefore, from shareholders’ point of view, in order to prevent the abuse of its appointees’ authority, or violation of laws and regulations and the Articles of Association which harm the interests of shareholders, this is the objective requirement for appointees on the activities and management of the company's business to monitor and supervise. However, due to a huge number of dispersed shareholders and a very limited knowledge and ability of them (exercise oversight functions that need to have specialized knowledge and skills), managing company is subject to time constraints (a shareholders' meeting convened by the number of years is always limited) and space restrictions (shareholders scattered throughout the country, a majority shareholders have their own career and are difficult to get out), so through the shareholders' meeting, the authorized company's supervisory body - the Supervisory Committee, to act on behalf of the general meeting to oversee the implementation of its main business privilege.
"Company Law" Article 52:- Directors, senior management of a company shall not concurrently serve as supervisors.
"Company Law" Article 52:- Board of Supervisors, supervisor of those companies without supervisory committee, they can exercise the following powers:-
- ( One ) Financial Inspection ;
- ( Two ) For directors and senior management personnel, supervise the conduct of their duties, for those in violation of laws, administrative regulations, chapter, they will through the process in shareholders' meeting, propose to remove directors, senior management staff ;
- ( Three ) When a director, senior management acts which pose damage to the company's interests, it requires the directors and senior management to correct it ;
- ( Four ) Proposes to convene an extraordinary shareholders' meeting, if the Board does not fulfill the provision(s) of this in article, it shall be convened and presided over the shareholders' meeting called duties, sets and presides over shareholders' meetings ;
- ( Five ) Submit proposals to the shareholders' meeting ;
- ( Six ) In accordance with "Company Law" provisions of Article 152, to raise litigation to directors and senior management ;
- ( Seven ) any other powers specified in the Articles of Association .
"Company Law" Article 55:- The supervisors may attend board meetings and regards the resolutions adopted by the Board of Directors, raise questions or suggestions.
Board of supervisors, the supervisor of the company without supervisory committee, found that if the company is running abnormally, they can investigate; if necessary, they can appoint an accounting firm to assist in its work, the fees are borne by the company.