System Design, The Board Of Directors Of Listed Companies

A company is an organization. For a healthy operation of this organization, many factors should be combined in line with a rule, through which interests can be distributed in a balance. Directorate, a decision-making department, is in a position of vital significance in a listed company. In view of the problems in China's listed companies in recent years, this dissertation, focusing on the directorate, analyzes the should-be and actual situations on directorate systems in their various operation phases. Suggestions on the rules for inside and outside operation mechanism of directorates are put forward with the hope to alleviate problems in listed companies by means of improving directorate systems.Starting with at the very beginning the relation between directors and listed companies and rights and obligations of directors, this dissertation discusses directors' legal positions in listed companies so as to show the importance of directorates, in which directors can exert their functions. Secondly, through a comparative research on present two main Corporate Governance models, the dissertation construes the relation between directorates and shareholders, balance between directorate and managers and how to exert the rights of board of supervisors. Thirdly, aiming at the ubiquitous infringement on and abuse of the directorate's rights as well as independence and agency of directorates, the article points out the lack of independence and restriction and incomplete stimulating mechanism are responsible for the present problems in listed companies. Negative effects originating from these three sides are discussed also. Finally, in order to resolve above problems, the following suggestions on inside and outside operation mechanism of directorate are presented: i) five main aspects in the course of seeking problem-resolving ways need considering including a detailed definition of the rights and obligations of directorate, restriction for correlative transaction, the specification for director-nominating procedures and the establishment of special committee in directorate as well as controlling the number of shareholders and managers in directorate; ii) independent directorate systems and relevant judiciaryassistance systems be improved for strengthening supervision, and competitive mechanism on agent voting be strongly recommended also; iii) stimulating mechanism be advanced on the base of bettering the way of distributing remuneration and building assurance systems of directors' responsibilities.