Formal Controls on the Operations of Auditors in Joint-Stock Companies (Comparative Study)

Abstract

The oversight committee in joint stock companies serves as the shareholders’ (or owners’) eyes over all actions undertaken within the company. Oversight, in principle, is an inherent right of every shareholder; however, exercising effective oversight over corporate activities requires specific technical and professional expertise that most shareholders may not possess, in addition to the need for ongoing, continuous monitoring of the company’s operations. Therefore, the law has entrusted the oversight committee with carrying out administrative, financial, and technical oversight of the board of directors and the executive management of the company, to ensure that the company’s affairs are conducted properly in accordance with applicable laws, regulations, and governing rules. This is intended, on the one hand, to promote transparency, disclosure, and discipline, and, on the other hand, to notify shareholders of any legal breaches or violations so that legal action may be taken, whether directly by the supervisory body or through the general assembly of shareholders, thereby assuring shareholders with respect to their investments in these companies.