The role and responsibilities of supervisors in Company Limited by Shares

A. The supervisor is the supervisory authority of a Company Limited by Shares. 

B. The qualification of a supervisor
1. Natural persons serving as supervisors: Does not have to be the shareholder, but must possess the capacity for civil conduct. (Company Act §216, IV, with the application of Company Act §192 I)

2. If the government or a juristic person shareholder serves as a supervisor: it is necessary to appoint a natural person to exercise the duties on its behalf, or to have its representative elected as the supervisor (Company Act §27ⅠⅡ). (In practical, the government or juristic person has to be the shareholder of the company to serve as supervisor.)

3. The supervisor shall be no criminal circumstances specified in §30 of the Company Law.

4. A supervisor shall not be concurrently a director, a managerial officer or other staff/employee of the company. (Company Act §222)

C. Election Method
1. Cumulative voting system. (Company Act §227, with the application of Company Act §198 I)

2. The "candidate nomination system" may be adopted. (Company Act §216-1, with the application of Company Act §192-1)

D. Numbers of Supervisor
1. For non-public companies: At least one supervisor is required, but a single-shareholder company is not required to appoint a supervisor (Company Act §128-1 III).

2. For public companies: At least two supervisors are required (Company Act §216 II).

E. Legal Relationship between Company and Supervisor—Agency Relationship in Civil Law. (Company Act §216 III)

F. Dismissal of Supervisor (same as for directors)

G. Supervisory Power: Each supervisor may independently exercise their supervisory powers. (Company Act§221)
1. Supervisors shall supervise the execution of business operations of the company, and may at any time or from time to time investigate the business and financial conditions of the company, inspect, transcribe or make copies of the accounting books and documents, and request the board of directors or managerial personnel to make reports thereon.
In performing their functional duties under the preceding Paragraph, the supervisors may appoint, on behalf of the company, a practicing lawyer and a certified public accountant to conduct the examination. (Company Act§218)

2. Supervisors shall audit the various statements and records prepared for submission to the shareholders' meeting by the board of directors, and shall make a report of their findings and opinions at the meeting of shareholders.
In performing their functional duties under the preceding Paragraph, the supervisors may appoint a certified public accountant to conduct the auditing in their behalf. (Company Act§219)

3. When a director discovers the possibility that the company will suffer substantial damage, he shall report to the supervisor immediately. (Company Act§218-1)

4. Supervisors of a company may attend the meeting of the board of directors to their opinions. (Company Act§218-2 I )

5. In case the board of directors or any director commits any act, in carrying out the business operations of the company, in a manner in violation of the laws, regulations, the Articles of Incorporation or the resolutions of the shareholders' meeting, the supervisors shall forthwith advise, by a notice, to the board of directors or the director, as the case may be, to cease such act. (Company Act§218-2 II )

6. In case a director of a company transacts a sales with, or borrows money from or conducts any legal act with the company on his own account or for any other person, the supervisor shall act as the representative of the company. (Company Act§223)

7. In case of a lawsuit between the company and a director, the supervisor shall act on behalf of the company, unless otherwise provided by law; and the meeting of shareholders may also appoint some other person to act on behalf of the company in a lawsuit. (Company Act§213)

8. Shareholder(s) who has/have been continuously holding 1% or more of the total number of the outstanding shares of the company over six months may request in writing the supervisors of the company to institute, for the company, an action against a director of the company. (Company Act§214 I)

9. In addition to the condition that the board of directors does not or is unable to convene a meeting of shareholders, the supervisors may, for the benefit of the company, call a meeting of shareholders when it is deemed necessary. (Company Act§220)

H. Responsibilities of the Supervisor
1. Responsibility towards the Company—shall have the loyalty and shall exercise the due care of a good administrator in conducting the business operation of the company; and if he/she has acted contrary to this provision, shall be liable for the damages to be sustained by the company there-from. (Company Act §23 I)
In case a supervisor has, in performing his functional duties, violated the provisions of any law, regulations, or the Articles of Incorporation of the company, or was negligent of his duties and thus causing any damage to the company, he shall be liable for indemnifying the company for such damage. (Company Act §224)

2. Responsibility towards Third Parties—If the responsible person of a company has, in the course of conducting the business operations, violated any provision of the applicable laws and/or regulations and thus caused damage to any other person, he/she shall be liable, jointly and severally, for the damage to such other person. (Company Act §23 I)

3. Joint Liability of Supervisor and Directors—In case supervisor is liable to compensate the company or a third party and a director is also liable, such supervisor and director shall be joint debtors. (Company Act §226)