Independent Director System In The Governance Structure Of Chinese Listed Companies

With the rapid development of Chinese economy, the securities market of our country starts from scratch and grows up speedily. Up to the end of December 2002, there are 1,160 listed companies in Shanghai and Shenzhen Stock Exchanges, with the market value of 4352.22 billion Yuan in total and circulation market value of 1446.317 billion Yuan. Securities market strongly stimulates the progress of Chinese . economy. However, along with the upgrading securities market, listed companies in our country have presented their characteristic drawback in corporate governance, that is " the control of insider due to the unparallel ratio of one shareholder", which damages the legal rights and interests of the whole corporation and medium and minor shareholders. By researching on the rationale of independent director system and its foreign practices and analyzing the current situation of independence director system in China, this thesis endeavors to enumerate the countermeasures and recommendations on overhauling the system of independent director in China and perfecting the corporate governance of listed companies.Besides the introduction, the thesis consists of four components. The first chapter concerns about the basic theories, which discusses the fundamental concepts and connotations of independent director. The second chapter introduces the foreign systems of independent director, presenting the empirical experiences of independent director system in American and England. The third chapter analyzes the situation of independent director system in China, which aims to uncover the problems existing in the practice of independent director system in our country and their causes and reasons. The fourth chapter is comprised of countermeasures and recommendations on improving the system of independent director in Chinese listed companies. On the basis of preceding three chapters, it details the countermeasures and recommendations on transforming the system of independent director in our country and perfecting the corporate governance of listed companies.The major thrusts and conclusions of the thesis: 1) the system of independent director is the effective measure to improve the corporate governance. Because of the division of ownership and managerial authority and stock ownership transforming from highly concentration to highly dispersal, western countries have countered the "dilemma of agency" and the relative problem of " insider control". As one of the tactics to tackle with these problems, the system of independent director gradually upsurges, while proving itself as an effective means to improve the corporate governance. 2) it is imperative to establish the system of independent director in China. There are severe loopholes in the corporate governance of Chinese listed companies, which mainly appear as the control of insiders and the exploitation of major shareholders on minor shareholders. The practices of independent director system in foreign countries illustrates that it can surely upgrade the corporate governance to some extent. It is necessary for us to learn from their experience ofdevelopment and build up a perfect system of independent director. 3) There are lots of looming problems in our system of independent director at present. These problems mainly present as following: over- concentrated stock of state ownership obstructs the effects of independent director(s); the boundary between the board of supervisory directors and independent directors is ambiguous; the number of independent directors is inadequate and their qualification as a whole is somewhat low; the framework and design of the system of independent director itself needs to be improved. 4) To perfect the system of independent director in our country, following steps should be accomplished: gradually reducing the stock of state ownership, lowering the its degree of concentration; rationally dividing the functions and the authorities of independent directors and the board of supervisory directors, improving the effect of supervision; sele...