China's Listed Companies Internal Oversight Mechanisms

Companies monitoring mechanism is an important component of morden companies, whether or not to play its role to ensure the normal operation of the company, to protect shareholders, creditors and the legitimate interests of stakeholders have very important meaning. "Company Law" to the board of supervisors to establish a full-time supervision for major companies in the main internal oversight model, but the overall effect of China's listed companies in the state of the board of supervisors is an indisputable fact. To change this situation, in 2001 the China Securities Regulatory Commission issued the "on the establishment of independent directors in listed companies in the guidance system", a mandatory requirement for listed companies to establish an independent director system oversight mechanisms. October 27, 2005, the Tenth National People's Congress Standing Committee's 18th session adopted amendments to the provisions of section 123 of the "Company Law": the establishment of independent directors of listed companies, specific procedures shall be specified by the State Council. Thus has created the independent trustee and the board of supervisors is going on the market the situation which the company coexists. So far, in the world except our country outside, any national company law has not used the surveillance pattern which the independent trustee and the board of supervisors coexists. Then, produces to the different government structure pattern these two kind of inspectors general mechanism whether can coexist, whether needs to coexist? If the two coexists, how their function does locate, how a jurisdiction stroke classification, is the question which is worth thinking deeply. The comparative analysis of the main methods used by the listed company oversight mechanisms basic theory, the Western model of a national company internal oversight mechanisms, our independent directors and the board of supervisors of listed companies to explore ways to study the relationship between this dual oversight mechanisms rationality.This paper is divided into introduction, body and conclusions of three parts, and the body divided into four chapters.Chapter Ⅰ "internal oversight mechanisms listed companies theoretical basis." This chapter analyses the major listed companies internal oversight mechanism concept, andmajor features of corporate governance and the important status and analysis of listed companies through equity structure, the Acting costs and controlling stockholder of moral hazard problems, which concluded : ownership, management rights and to supervise the separation of the ownership structure, the Acting cost on natural place;When the master control in a listed company holding the hands of shareholders, curb controlling shareholders equity structure of moral hazard behaviour has become the focus of the State must be resolved. Therefore, companies need to establish monitoring mechanisms by the operators, so that both the greatest possible consistency goals.Chapter II "Western companies more internal oversight mechanisms model legislation and the impact on our company." This comparative analysis of the Western countries companies three main internal oversight model, a model of oversight mechanisms background and foreign corporate governance oversight model for my company legislation. As countries economic, political and cultural differences in terms of background, a current world Typical three types : First, the United States single-level system of internal oversight model;Second, the German two-tier system of internal oversight model;Third, the French style compromise internal oversight model. Internal Oversight through three different models more difficult to use "or" to evaluate what kind of governance model more advantages, the system is effective in a country with specific survival soil, it does not automatically apply to other countries. Therefore, in company management and supervision mechanisms, and systems for transplant and the process must take full account of our economic, political, cultural and legal background.Chapter III "My internal supervision of listed companies and the independent directors to explore the relationship between the board of supervisors." This chapter primarily on the company's traditional internal oversight mechanisms and the resulting foundation, the board of supervisors functional barriers, the introduction of our system of independent directors and independent directors of listed companies and the board of supervisors practical contradictions and conflicts. Since my subject to civil law countries, our company adopted a two-tier system of the board of supervisors monitoring mode.Chapter IV " Our independent directors and the board of supervisors of listed companies rational and analytical relations coexist." This mainly expounded on the relationship of three independent directors and board of supervisors academic divisions : functional complementarity coexist said, not doctrine, that authorized or arbitrarychoice;Independent directors and the board of supervisors both rationality analysis;Our independent directors of listed companies with the functions and terms of the board of supervisors relations division. Independent directors and the board of supervisors in the maintenance of the interests of shareholders, and realize maximum benefits companies have a common goal, as supervisors have the same philosophy, in essence there is no conflict of interest. Introduction of independent directors to our existing system is a necessary complement to the company internal oversight mechanisms, which to a certain extent, things will only change the current status quo. And the existence of independent directors is equally certain drawbacks, its board of supervisors may also be supplemented.Finally, the article concluded. In listed companies, directors and the board of supervisors to establish an independent monitoring mechanism will double is reasonable, in order to give full play to the superiority of the two oversight mechanisms function, we must first clearly defined the functions and powers are divided, institutionally arrangements to ensure that its effectiveness and coherence.