Discussion On The Independent Director System Of Listed Companies In China

What this paper studies is the system of independent directors. It is a very microcosraic sub-system, which belongs to a series of institutional arrangement about corporate governance framework. Its aim is to make the directorate decisions more independent and scientific.The paper consists of five parts.In Chapterl, the writer puts forward the topic and mainly expatiates on theoretic foundation, besides the development history of independent director system. The writer holds that independent directors must bear four characteristics as follows: relatively independent assets of company, independent personality, independent interests and independent operation. In theory, independent directors are members of directorate, who have completely independent volition and stand for all stockholders' interests & the whole company' s interests. They have nothing with company & its managers in economic interests & personal relationship. This system develops on the basis of non-executive director system and builds on the property right theory, entrust ing-deputizing theoryand information asymmetry theory.In Chapter2, by comparative analysis, the writer draws aconclusion that the status of independent director system in English and America is different from that in German and Japanese. The main reasons are their four different things such as the corporate governance framework,inspiring and restricting mechanism which principal takes to inspire and restrict agent, the degree to which principal intervenes agent, outside supervising mechanism.In Chapter3, the writer pays much attention to difficulties and problems about constructing the independent director system in our country. Firstly, independent directors are not many enough to take effect. Secondly, responsibilities of independent directors are not clear. Thirdly, independent directors lack inspiration and restriction. Fourthly, they cannot acquire enough timely, impersonal and exact information. Moreover, stockholder structure in our country is irrational. The manager market, capital market and reputation mechanism have not been established completely.In Chapter4, the writer comes up with some proposals to make a push on building our independent director system. The writer thinks that some measures should be taken to resolve above-mentioned difficulties and problems. First of all, position of independent directors in the companies should be explicit. Secondly, it must be rational to choice independentdirectors. Thirdly, responsibility, right and interests of independent director should be regularized. Fourthly, perfect information should be offered to independent directors. Lastly, the outside environment should be improved on.In the last, the writer makes a summary.As an institutional arrangement, independent director system is madeup of many sub-systems. Besides, exerting its function needs correspondingly matching society mechanism. So it depends on both aspects whether the system works or not. At present, constructing status of them has a gap with the terms which independent director system needs. It decides that the effect of independent director system is limited in our country these days.It should be clear that it is impossible to resolve all problemsin corporate governance only depending on the system.By the way, there are two innovations in the paper. One is very legiblemethod because the writer expounds on proposals perfecting our independent director system from the view of independent director's position in the company. The other is that the write designs sub-systems about independent director system from the view of law. These have some certain reference value in practice.