The Draft Amendment the Company Law of the People's Republic of China allows companies to further simplify the organizational structure. Smaller companies are not obliged to set up a board of directors. In addition, joint-stock companies may choose one or two directors. Article 64 of the revised draft states that "a limited liability company may, in accordance with the provisions of its charter, set up an audit committee composed of directors, which shall be responsible for supervising the company's financial and accounting affairs and exercising other powers and functions as provided in the charter. The board of directors of a limited liability company with an audit committee, may not set up a supervisory committee or supervisors."
Furthermore, Article 125 provides that "joint-stock limited companies that set up an audit committee with more than half of its members being non-executive directors, may not set up a supervisory committee or supervisors, members of the audit committee shall not serve as the company's manager or financial officer." Article 153 adds that "wholly state-owned companies shall not have a supervisory board or supervisors in accordance with the provisions and shall set up an audit committee composed of directors and other special committees in the board of directors, and a majority of the members of the audit committee shall be outside directors."
