The Perfection Of The Independent Director System In China

In 2001, SEC of China issued Guide Suggestion about Building Independent Director, which is the sign of initial establishment of the independent director system in our practice. After development of ten years, the independent directors system has exposed some problems. The solutions of these problems are crucial for the future development of corporate governance of Chinese listed companies. Therefore, the author intends to do the study based on the feasibility of the independent directors system in China, trying to offer some useful suggestions of the further improvement of this system.The paper consists of four parts. The main contents are as follows:Chapter One is the summary of the independent director system. First is the introduction of the background knowledge of independent director system, introducing the precondition-agency theory and the survival soil-American corporate governances. Second section gives the introduction of the development and the reform of independent director system in America.Chapter Two mainly introduces the development of the independent director system in China. First is the background situation introduction. The internal corporate governance model is two-tier system, so the supervision committee is the regular supervision agency. But the stock right is highly centralized, and State-owned stock is"only one big share"in many Chinese listed companies, which controls the company operation and causes the board of supervisors ineffective. Next part introduces the legislation and practicing of the independent directors in China. In the last section, the writer also analyses the problems emerged.Chapter Three is the analysis of the feasibility of the independent director in China. First is the comparative study of the different functional orientations of the Chinese and American independent director system. Then the effective analysis is given, though positive and negative examples. The last part discusses the compatibility of the independent director and the board of supervisors. According to the above study, it is affirmed that the independent director system is feasible in China, but needs improvement and perfection.Chapter Four is the suggestions of the perfection of the independent director system in China. The primary task is cleaning up the functions of the independent directors and the boards of supervisors on the basis of the feasibility analysis. According to their supervising features, the emphases of their functions are analyzed, in order to bring them into full play and avoid functional conflicts. Then the writer give the suggestions of maintaining independent director's independence by consummating the correlative systems, like appoint-dismisses system and payment system. The last section is the suggestion of the guarantee for the independent directors to execute the power. This paper provides these suggestions to perfect the independent director system in several areas in order to complete the corporate governance of the listed companies in China.