Research On The Function Orientation Of Independent Directors System In Listed Company In China

Since bond market was founded ten years ago in china, bond market has made great contribution to economic reform and development. However, the illicit conduct that big stockholders impose unlawful measures to harm the benefits of the middle and small stockholders has always come. The confusion of corporate governance in listed company has been the exigent resolution problem in china. In order to establish relative well and normative corporate governance in listed company in china, the China Securities Regulatory Commission has issued "The Guidance Note of Constructing the Independent Directors System in listed company" .Many listed company act on these documents. The engaging of Independent Directors do improve the supervision of the listed company and enable it to operate more normatively.There are two basic models in the institutional arrangement of authority mechanism in corporate governance in western countries. One is the one-tiered model, i.e, no regular organization is set within company to supervise the board's decision-making; the other is the two-tiered model, i.e, a regular organization is set to supervise the board's decision-making. In both models, the general meeting of stockholders should hold supreme authority. But, in fact, the board has been the center of authority and decision-making. The board has become more and more powerful, and shoulder greater and greater responsibilities. Accordingly which weakens the function of the general meeting of stockholders of supervising the board. Thus, the board and its member are required, on half of all the stockholders, to make decision scientifically and exert firm and effective control over the management team. However, the big stockholders, in the process of maximizing their own profits, may damage the benefits of the middle and small stockholders due to the imperfect market and incomplete competition. Therefore, it is urgent that the Independent Directors system be constructed- Independent Directors who safeguards the benefits of the middle and small stockholders are included in the decision-making team-In order to make the board attach importance to the benefits of the stockholders and the company as a whole.Among the one thousand odd listed companies in china, the operating mechanism as well as the level of governance of as far from the required level. As the internationalizing of the capital market, investors' confidence can only be enhanced by good corporate governance. To meet the demands from the international capital market, companies must perfect the corporate governance to finance in the international market.4But many problems of corporate governance exist in the listed company in china most of which were reorganized from State-Owned-Enterprises. The basic feature of their corporate governance can be summarized into "insider control under governmental intervention". For instance, high concentration of stock equity, big stockholders dominating the board, most of the stockholders in opposition to the representatives of the State-Owned stock equity, listed company clung to parent company and unable to protect its own benefits, etc. under these circumstance, a highly effective Independent Director system can avoid insider control and make the board more independent.However, the establishment of Independent Director system in china must be faced with the problem of how to partition the jurisdiction between Independent Director and the board of supervisors. Independent Director system originated from America in 1970's.The function of Independent Director in listed company in America is similar to the function of the board of supervisors in listed company in china. Which is that in Western countries on the represent of English and American law, their corporate governance model is one-tiered model, that is, under the general meeting of stockholders is set up only the board not the board of supervisors, therefore the supervisory function of Independent Director is obvious. But in china, corporate governance model is two-tiered model, tha...