On The Improvement Of The Internal Oversight Mechanisms In China's Stock Company

Although Independent Director System is prevailing for a time based on administration power in China, the disputes on it never cease in theory. This thesis takes the background of the introduction of Independent Director System in China. Based on the analysis of the advantages and disadvantages of Independent Director System in China, this thesis discusses the improvement of inside supervision mechanism of China's joint-stock company. This thesis includes four chapters except for the preface and the conclusion. Chapter One discusses the theory and significance of inside supervision mechanism of joint-stock company and introduces three typical inside supervision mechanism of joint-stock company in the world. Chapter Two discusses two highlight problems in the inside supervision mechanism of China's joint-stock company. They are Supervisory Board existing in name but not in reality and the false participation of staff and workers. Five reasons are responsible for the two problems, and they are as follows: historical reasons, occurrence of "only one dominant share", special controlling by inside person, non-improvable legal regulation for the power of Supervisory Board and obsolete legislation guiding ideology about the participation of staff and workers. Just because the flaw of the inside-supervision mechanism in China's joint-stock company, illegal activities were frequently happening. Therefore, supervisory department decided to introduce Independent Director System into China. At the last part of this chapter, the author looks back on the course of introducing Independent Director System. Chapter Three discusses the advantages of Independent Director System in China from three aspects, which are strengthening supervision function of the board, improving the controlling situation of inside persons and providing strategic consultation. And then, this chapter also discusses the inherit and particular limitation of Independent Director System in China. The author thinks that the outside market environment and cultural root that hinder Independent Director System to give full play might be the two particular limitation of it in China. And these two limitation would be existing for a long time and is difficult to be improved. Thus, the function of Independent Director System in China would be limited. At the last part of this chapter, the author demonstrates this conclusion by analyzing practice effect of this system in China. Just because of the two long-term existing particular limitations of Independent Director System in China, we could not place great hopes on it at the beginning. Chapter Four simply discusses how to improve Independent Director System at the first part. Nevertheless, based on the reality of the long-term existing limitation mentioned above, it was not enough for improving the inside supervision mechanism of China's joint-stock company just only depending on introducing and perfecting Independent Director System. The author proposes that based on the traditional Two-Tier system, China should improve the inside supervision mechanism of joint-stock company from perfecting Independent Director System and Supervisor Board, coordinating the relationship between Independent Director and Supervisory Board and bringing staff and workers' supervision into play.Chapter Three and Chapter Four both are the emphasis of this thesis.The research methodology of this thesis combines theoretical analysis with authentic proof analysis.