The Research On Independent Director In Listed Company In China

The public listed companies in China always suffer from poor CorporateGovernance Mechanism and the interests of the medium and small stockholders are hurt.In order to regulate Chinese securities market, ensure the interests of the medium andsmall stockholders, further improve the governance structure of listed companies,standardize their operation, China Securities Regulatory Commission (CSRC)formulates the Guidelines for Introducing Independent Directors to the Board ofDirectors in listed Companies. All domestically listed companies shall make necessaryamendments to the articles of association in accordance with the requirements set in theGuidelines and appoint qualified persons to be independent directors. At least one of theindependent directors should be an accounting professional (refers to personnel withsenior professional title or certified public accountants). By June 30th, 2002, at leasttwo members of the board of directors shall be independent directors;and by June 30th,2003, at least one third of board shall be independent directors. But the implementationof this institution has not been very satisfactory so far due to some problem such as laws,regulations, independence of independent director, incentive and restriction mechanism.This paper analyzes the function of independent directors and proposes the furthertheoretical strategies and suggestions on the basis of research of many researchers. Thepaper includes five parts. The first part introduces the definition and the process ofgeneration and development about the independent director. Thesecond part points out the reason for the implementation of the independent system inChina. In the third part, the author analyzes the implementation effect of this system onChinese public listed companies. In the result, the institution of independent directorcannot take effect in Chinese public listed companies. The fourth part analyzes thecause which the institution has no effect. In the last part, system on Chinese publiclisted companies. In the result, the institution of independent director cannot take effectin Chinese public listed companies. The fourth part analyzes the cause which theinstitution has no effect. In the last part, the author put forward own advises about howto improve the efficiency of the system in allusion to these causes.