Banks in action, over 20 banks have abolished their supervisory boards

On December 10th, CZBANK and Chongqing Rural Commercial Bank announced that they plan to no longer establish a supervisory board. This year, more than 22 banks have initiated or completed plans to abolish their supervisory boards.

CZBANK announced that the board meeting approved the proposal "to no longer establish a supervisory board." This proposal still needs to be submitted to the shareholders' meeting for approval.

The proposal "to review the decision of Chongqing Rural Commercial Bank Co., Ltd. to no longer establish a supervisory board" has already been approved by the temporary shareholders' meeting.

By April 2025, five large state-owned commercial banks, namely Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Bank of Communications, as well as two joint-stock banks, China Merchants Bank and Huaxia Bank, successively issued board resolution announcements stating that they plan to no longer establish supervisory boards.

Thus, the supervisory board system that has been in operation in the country for decades is gradually reaching a turning point.

In September, the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank issued announcements stating that they would no longer establish supervisory boards. The relevant banks were approved by the shareholders' meeting and the revised articles of association approved by the National Financial Regulatory Administration, and will no longer establish supervisory boards.

In addition, within this year, banks such as CITIC Bank, Xiamen Bank, Qingdao Bank, Industrial Bank, Changsha Bank, Ping An Bank, Ruifeng Bank, Shanghai Bank, Suzhou Bank, Lanzhou Bank, Shanghai Rural Commercial Bank, Wuxi Bank, Everbright Bank, Minsheng Bank, and SPD Bank have initiated or completed the abolition of their supervisory boards.

This adjustment is made according to the relevant provisions of the newly revised Company Law effective from July 1, 2024.

Article 69 of the revised Company Law clearly states:

"A limited liability company may establish an audit committee composed of directors in accordance with the provisions of the articles of association, exercising the powers of the supervisory board as stipulated by this law, and may not establish a supervisory board or supervisors. Employee representatives among the members of the company's board of directors may become members of the audit committee."

Subsequently, on December 17, 2024, the National Financial Regulatory Administration issued the "Notice on Matters Related to the Connection Between Company Governance Regulatory Provisions and the Company Law" (hereinafter referred to as the "Notice"). It made corresponding provisions regarding the adjustment of the functions of the supervisory board.

The relevant functions and positions of the supervisory board will be undertaken by the audit committee of the board of directors, which will assume the powers of the supervisory board as stipulated by laws and regulations; or the board of directors may set up employee directors and include them in the audit committee of the board.

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