Independent Director :System,Theory And Practice

The Guide of Held Corporation Charter enacted by SEC of China in 1997, provided that held corporation could build independent directors if necessary. After that, lots of discussion about independent directors was seen on the papers and magazines. In 2001, SEC of China issued Guide Suggestion about Building Independent Director, which initially established the independent director system in our practice. However, it is vague what the purpose is to draw this system into our country,whether it is necessary to set it up and how to constitute it in China. To answer these questions, we have to learn the independent director system fully and explore it deeply.This thesis begins with the introduction of the origin and development of the system and studies the theories and practices of it in USA,Germany and Japan. Also, The area of Hong Kong is studied because its corporate governing structure has continuous and strong effect on interior's corporation reform. Analyzing and comparing the differences between these areas, we found that although the independent director system has been extensively accepted by all corporation practice, there is no affirmative and unanimous conclusion about its use.In China, the aim for introducing the independent director system has not been achieved, and the use wanted has not been made too. It is not only because the system itself is not perfect, but also its theory basis is illogical. Although some corporations have had independent directors for long in our country, there are no evidences to show that they have deep and good influence on corporate governance and management. It results from the inherent faults of the system origin ,the contradiction of some related systems in the west countries and so-called Chinese climates. In this meaning, it is a Chinese problem.This thesis proves that the agency theory is used wrong to interpret the independent director system, and then clarifies the corporate social responsibility theory. A new theory——the public trust theory, is used to support the system. In this theory, the independent directors are trustees of public's. They are independent from shareholders,stakeholders and the governments. They are liable for the public objectively and impartially with their independent status. On the ground of theory analyzing, this dissertation uses the public trust theory to re-constitute the independent director system of our country. The system in this theory will be a surprise for our corporate reform.