Study On The System Of Independent Directors In China's Listed Companies

The system of independent directors (hereinafter refer to as The System) originates from common law system, which plays an active role in improving corporate governance, enhancing the corporate performance, regulating corporate operation, and the like. The successful implementation of the system encourages many countries from civil law system to establish their own system of independent directors aimed at regulating and perfecting corporate governance.The system of independent system was introduced into China in late 1990s', with the advantages of perfecting corporate governance, restricting insiders' control and protecting the rights and interests of minority shareholders. It's a practical and significant issue to borrow the experience of western countries on the theory and practice of independent directors, so as to establish our own system of independent directors. As for the legislation and practice of the system of independent directors, China is still in its inchoation period. There is a crying need for some troubles to be discussed and resolved.Part 1 gives a systematic introduction to the system of independent directors. The definition and classification of the directors are introduced, with emphasis on the definition of independent director. The establishment of The System and its motive in US law system is expounded. Experiences on The System in other countries are also introduced.Part 2 reviews the practice of The System in China's listed companies. The reasons for the introduction of The System into our law system are analyzed.Part 3 expounds the function of the independent directors and its coordination with the supervision board. The power of the independent directors is also discussed.Part 4 discusses the specific running of The System in China. The qualifications for the independent directors, the selection procedure, the duties of the independent directors, the percentage of the independent directors in the board, and the incentive mechanism are discussed. Corresponding measures for the smooth running of The System in China are also proposed.In the conclusion part, the author concludes that The System can be integrated into our law system. However, the introduction of The System into our legal system can not solved all the problems in the corporate governance once for all. In the meantime, we cannot ignore the reconstruction the supervision board in the company.