A Brief Comment On The Independent Director System In Chinese Listed Corporations

The independent director system has already become an important system arrangement in most countries, especially in developed countries. By August 2002, China securities and administration Commission has decided to promote the system ,our country is practicing this new system.. Now some people approve the system, but others are not. Since 20 centuries ,the modern company system has already become a main enterprise organization form. Its characteristics concentrates on scattered share and separating ownership from managerial authority. This kind of characteristics as if double blade sword , at the same time it operate in the sound business enterprises, and also weaken the owner inspect mechanism , and easily causes the insider control in the company . Since 60 ages ,the affairs that management injured the shareholder benefits and social benefits have often occurred. It indicates that the stipulation of exterior market and agent market can not prevent the insider control and moral hazard. Exactly under this background, it has acquired extensive agreement that independent director system can be used as a valid measure to corporate governance and balance the executive director and management layer.The modern corporation theories comprehend enterprise as a series of assemble. the corporation's contract theory tells us ,because of future uncertainty, environmental complexity and limited rationality, people can not predict all affairs that may take place in the future, and write them in the contract, even if they attempt to do so, highly cost also make this reward is not worth the effort. Therefore enterprise contract is a incompletely contract. the incompletion of contract and contract incompletion of solution for traditional legal person is a basic reason for independent director. the blemish of traditional legal person has two aspects ,one is in the stock split-up the right of control transfer to managers, this would make the shareholders' meeting become the hull, and result in the board of directors out of order, the others is that it can not validate to repress the big shareholder to manipulate the enterprise and abuse the limited liability's behavior. the blemish of traditional legal person structure is stagnant signal in exterior market, it is useless for bigshareholders abuse limited liability. For making up the deficiency, system reformer design independent director system is one of the useful choices. The independent director system has become a important measure to enhance corporate governance in the mature market . generally, share structure decides the governance structure and governance mode . According to the scattered share , it can be divided into three circumstances: the first is the big shareholder control the position in the highly concentrating companies; the second is management control the position in the decision; the third is internal person control the position. In the three circumstances, independent director can manage the extreme behavior of the big shareholders, management and internal person, and he can well perform his supervisory function.Above three kinds of circumstances exists in the listed companies. big shareholder pulled out listed companies ,listed companies concoct and publish deceive information, the board of directors either become a decoration or a toll, the supervisor meeting is nothing but an empty shell. In this case ,China Securities and Administration Commission draw into independent director system to solve the board of directors failure and norm the listed companies governance structure.The core of independent director is his independent stipulation . but in factual operation, we must look on the independent director as economic person, acknowledge he has request for benefit. We can see the independent problem from two aspects, one is that he can not have direct connection with stakeholders, the others is that his benefit must have highly connection with legal person's benefits. His essential function is for enhancing the board of director's function and ma...