For a long time, the division of powers between the shareholders' meeting and the board of directors has been the core issue of controversy in the field of corporate law, with shareholders' eminence emphasizing the priority of shareholders' interests and director-centrism emphasizing the will of the board of directors and advocating that the business judgment of the board of directors should lead the operation and development of the company. Throughout the world's major mature capital markets, such as the United Kingdom and the United States, all have a common feature: the company is independent, and it exists for the benefit of shareholders but is dominated by the board of directors at its core.
China's current Company Law is clear only on the functional positioning of the shareholders' meeting (the shareholders' meeting is the power body of the company), while the positioning of the board of directors is not explicit. The practice directly gave rise to many problems in corporate governance. Indeed, the phenomenon of direct shareholder participation in management is widespread. Therefore, the reform of the concept of corporate law in China aims to overcome the direct participation of shareholders of close corporations in the company's decision-making process.
In the revised draft, Article 62 adds "The board of directors is the executive body of the company, and it shall exercise the powers and functions other than those provided for in this Law and the articles of association." For the first time, the board of directors of a limited liability company is clearly defined as the "executive body" of the company, and the original enumeration of the powers and functions of the board of directors is deleted, while a similar approach is taken with respect to the powers and functions of the manager. This terminology is consistent with the Civil Code of the People's Republic of China.
In addition to the tendency of the draft amendment to "director-centrism", we must also acknowledge that in the current corporate law system in China, the board of directors is still unable to maintain its role as a "neutral party" and presents the phenomenon of institutional formalization. The key to the role of the board of directors is to maintain its independence and neutrality at the level of management power, but this is not possible in the current business operation in China. In practice, the management power of the board of directors is often mixed with the decision-making power of the shareholders' meeting. The board of directors is elected by the shareholders' meeting, and the board of directors represents the will of the shareholders' meeting to a certain extent. At the same time, the identity of shareholders and the identity of directors often overlap, and the independence of the board of directors cannot be maintained.
