Analysis On Power Distribution, Check And Balance In The Co-existence Of Independent Director And Board Of Supervisors In China

Since the independent director system began to be implemented ithas experienced for totally six years, during which lots of casesabout disorder of corporate government still arose. Because of thespecialty of share structure of domestic listed companies, it isimpossible for a single independent director system or board ofsupervisors system to really supervise large shareholder andmanagement, which requires, especially for listed companies, aspecial corporate governmental pattern of supervision jointly byinternal and external. However, in fact, there is still a big problemin such dual supervision system. In this thesis, author tries toanalyze the power relationship between independent director and boardof supervisors, to make their supervision supplement and balance eachother, in order to make such special corporate governmental patternreally work as supervision lever for listed companies.In chapter one, author states the theory foundation of the coexistenceof independent director and board of supervisors indomestic listed companies. China is one of the few countries in the world where listed companies are required to be dually supervised byboth of internal and external. This concerns that largelyconcentrated shareholding procures listed companies controlled mostlyby internal, which is also special characteristic of most of domesticlisted companies, so that these listed companies lose theirtransparency which they should have maintained as public companies.That's why independent director, as external supervision power, iscapable of making up for such shortcoming of board of supervisorscaused by large shareholders. Although such dual supervision systemis bound to cause low efficiency, as far as in China, improvement insupervision over listed companies by independent director can totallymake up for low efficiency caused by dual supervision, so as toguarantee the interest of public investors.Chapter two is to study on the reason for dissimilation ofindependent director system and board of supervisors system in Chinaand to define the relationship between these two systems. Above all,through analysis on the differences between independent director andboard of supervisors in respect of proceeding and scope of theirsupervision over listed company, author analyzes probability andfeasibility of distribution of their power. On the grounds of theintensive conflict between these two supervision organizations inlegislative field in China, analysis on their relationship in legalprinciple is the key point to define their relation.Chapter three is about research on power distribution, check andbalance between independent director and board of supervisors. Inthis chapter author emphasizes analysis on feasibility ofdistribution of power between them and attempts to create access andprocedure for independent director and board of supervisors toexchange their information, so as to further their information communication, and to check and balance their power. Both of theaforesaid two systems in China are results of legal transplant fromoverseas. Therefore, to define the power relation between these twosystems is the only way for us to make full use of their differentadvantages and combine with one another perfectly, so as to jointlysupervise management and operation of listed companies.