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The Board of Supervisors is established to monitor the Company’s financial position, compliance with laws and regulations, and the performance of duties by the Board of Directors and management, thereby protecting the interests of depositors and shareholders.

8.6.1 Composition of the Board of Supervisors

The Company’s Board of Supervisors consists of 9 members, 4 of whom are shareholder supervisors, 3 are employee supervisors and 2 are external supervisors. The 4 shareholder supervisors from large state-owned enterprises where they hold key responsible positions and have extensive experience in business management and professional knowledge in finance and accounting; the 3 employee supervisors have long participated in banking operation and administration, accumulating rich professional experience in finance; and the 2 external supervisors are experts on corporate governance of financial institutions and large state-owned enterprises. The composition of the Company’s Board of Supervisors is reasonable, having adequate expertise and independence which ensures the effective supervision by the Board of Supervisors.

A Nomination Committee and an Supervision Committee are established under the Board of Supervisors.

8.6.2 How the Board of Supervisors performs its supervisory duties

The duties of the Board of Supervisors are to inspect and supervise the operations, risk management and internal control of the Company as well as the duty performance of directors and the senior management, and to evaluate the annual duty performance of directors. These duties are performed by holding regular meetings, attending shareholders’ general meetings, board meetings and special committee meetings, working conferences of the President of the Bank and fund analysis meetings; reviewing various documents submitted by the Company, reviewing work reports and specific reports of the management, conducting investigations and surveys at domestic and overseas branches of the Company and having talks with the senior management, etc.

8.6.3 Meetings held by the Board of Supervisors during the reporting period

During the reporting period, the Board of Supervisors convened 7 meetings, of which 3 were physical meetings and 4 were meetings convened and voted by correspondence.

On 18 February 2011, the 4th meeting of the Eighth Session of the Board of Supervisors was convened and voted by correspondence. 9 out of 9 supervisors eligible for voting voted at the meeting. The “Resolution on Granting Appreciation Rights of the H Share of China Merchants Bank to Senior Management for Phase IV” was considered and approved at the meeting.

On 30 and 31 March 2011, the 5th meeting of the Eighth Session of the Board of Supervisors was convened in Shenzhen. 8 out of 8 supervisors eligible for voting voted at the meeting. A number of items including the “Resolution on Re-electing Han Mingzhi as the Chairman of the Eighth Session of the Board of Supervisors”, the “Work Report of the President for the Year 2010”, the proposal of the “Full Text and Summary of the 2010 Annual Report”, the “Social Responsibility Report for the Year 2010”, the “2010 Financial Statements and 2011 Budget Report”, the “Profit Distribution Plan for the Year 2010”, the “Resolution on Appointing the Accounting Firms for the Year 2011 and their Remuneration”, the “Resolution on Placement and Use of Raised Fund for the Year 2010”, the “Work Report of the Board of Supervisors for the Year 2010”, the “Work Plan of the Board of Supervisor for the Year 2011”, the “Resolution on Appointing an External Supervisor to Fill a Vacant Position”, the “Appraisal Report on the Duty Performance of Directors in 2010”, the “Appraisal Report on the Duty Performance of Supervisors in 2010”, the “Self-assessment Report by the Board of Directors on the Internal Control for 2010” were considered and approved at the meeting. In addition, the Board of Supervisors also reviewed the “Internal Audit Report for the Whole Bank for the Year 2010”, the “Audit Report on Related-party Transactions in 2010”, the “Report on Quality of Credit Assets of the whole Bank for 2010” and the “Work Report on Case Prevention and Control in 2010”. On 28 April 2011, the 6th meeting of the Eighth Session of the Board of Supervisors was convened and voted by correspondence. 8 out of 8 supervisors eligible for voting voted at the meeting. The “First Quarterly Report for 2011” of the Company was considered and approved at the meeting.

On 30 June 2011, the 7th meeting of the Eighth Session of the Board of Supervisors was convened and voted by correspondence. 9 out of 9 supervisors eligible for voting voted at the meeting. The “Resolution on the Auditing Conclusion regarding Resignation of Fan Peng as Chief Audit Officer”, the “Resolution on the Auditing Conclusion regarding Resignation of Wang Qingbin as Executive Assistant President” and the “Resolution on the Change of the members of the Nomination Committee under the Board of Supervisors” were considered and approved. On 18 July 2011, the 8th meeting of the Eighth Session of the Board of Supervisors was convened in Shenzhen. 7 out of 9 supervisors eligible for voting voted at the meeting. Supervisors Li Jiangning and Wen Jianguo authorized supervisor Zhu Genlin to exercise the right to vote on their behalf. At the meeting the supervisors considered and approved the “Resolution regarding the Ratio and Number of Shares to be Issued under the Rights Issue of A Shares and H Shares by China Merchants Bank Co., Ltd.”, the “Resolution on the Disposal of the Accumulated Retained Profits prior to the Rights Issue of A Shares and H Shares by China Merchants Bank Co., Ltd.”

On 29 August 2011, the 9th meeting of the Eighth Session of the Board of Supervisors was convened in Qingdao. 9 out of 9 supervisors eligible for voting voted at the meeting. The “Work Report of the President for the First Half of the Year 2011” and the text and the summary of the “Interim Report for 2011” were considered and approved at the meeting. In addition, the Board of Supervisors also discussed and determined the priorities of its work for the second half of 2011.

On 28 October 2011, the 10th meeting of the Eighth Session of the Board of Supervisors was convened and voted by correspondence. 9 out of 9 supervisors eligible for voting voted at the meeting. The “Third Quarterly Report for 2011” of the Company and the “Resolution on the Change of the Members of the Supervision Committee under the Board of Supervisors” were considered and approved at the meeting.

In 2011, the Company convened 2 general meetings and 16 board meetings. Supervisors attended the general meetings and were presented at the board meetings as non-voting delegates, and supervised the law and regulation compliance, voting procedures of the general meetings and board meetings, Directors’ attendance, statements made and voting at the general meetings and board meetings respectively.

8.6.4 Reviewing specific reports and conducting investigations and surveys by

the Board of Supervisors

At the 5th meeting of the Eighth Session of the Board of Supervisors convened in March 2011, the Supervisors reviewed the “Internal Audit Report on the Whole Bank for the Year 2010”, the “Audit Report on Related-party Transactions in 2010”, the “Report on Quality of Credit Assets of the Whole Bank for 2010” and the “Work Report on Case Prevention and Control in 2010”.

In June 2011, certain members of the Board of Supervisors conducted a survey in the U.S.. The Board of Supervisors visited the Company’s New York branch, the U.S. representative office and carried out extensive discussions with officials of the Federal Reserve Bank of New York and the New York State Banking Department, and the leaders of several Chinese financial institutions based in the U.S., including PBOC, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and Bank of Communications. The discussions covered issues of Chinese and American economies, financial regulation and the operation of Chinese financial institutions in the U.S.. The visit provided the Board of Supervisors with more information of foreign economy and its financial environment and enable supervisors to learn from its foreign counterpart about governance and operation.

In August and November 2011, the Board of Supervisors visited the Qingdao Branch and Kunming Branch respectively to conduct a collective investigation, so as to gain thorough understanding of the risk management and compliance management conducted by the branches and sub-branches of the Company as well as the problems and difficulties confronted in implementing the strategy of the “Second Transformation” initiated by the Head Office. During the process of investigation, the supervisors put forward their opinions and suggestions to the branches on many aspects including ways to enhance refined management, to intensify development of SME business, to perfect internal control system, to strengthen service management and product innovation, to reinforce construction of organization and cultivation of talents, etc.

During the reporting period, the chairman of the Board of Supervisors visited 12 branches and 1 sub-branch in Guangzhou, Dongguan, Zhengzhou, Tianjin, Dalian, Qingdao, Shanghai, Fuzhou, Kunming, Chongqing, Chengdu, Nanning, Ganzhou, and departments at the Head Office including the Remote Banking Centre, the Credit Card Centre, CMB Financial Leasing Company Limited as well as some of its subsidiaries. With such investigation, the chairman gained comprehensive understanding of the implementation of the “Second Transformation” by these branches and the risk control and compliance management as well as the duty performances of the leaders of these branches. Moreover, the chairman of the Board of Supervisors also met the heads of the regulatory departments in each branch’s jurisdiction so as to obtain further information on the operations of these branches from the regulators’ perspective and their appraisals for such branches.

8.6.5 Operation of the Special Committees under the Board of Supervisors

The Nomination Committee and the Supervision Committee are established under the Board of Supervisors, each consisting of 3 supervisors. The chairman of the Nomination Committee and the Supervision Committee is served by an external supervisor respectively.