The Independent Director System Of Listed Companies In China

Recently, for the purpose of improving the listed company's governance structure, China introduces the Independent Director System which is popular in British-American legal system countries. In accordance with the Guidelines on Establishment of Independent Director System of Listed Company enacted by the Security Supervisory Commission, the listed company's board of directors shall include at least one third of independent directors prior to July 30th, 2003. In addition, the newly revised Company Law provides that listed company shall employ independent directors.Independent Director System is a systematic arrangement under the"one level board"corporate governance structure of British-American legal system countries. The board of directors is the decision making organ as well as the supervisory organ.This paper has four chapters and about thirty thousands words. In Chapter One, we state the corporate governance system and structure, the concept, legal features, functions, obligations of independent directors. We analyses origin and development of Independent Director System. The corporate governance system includes inside-system and outside-system.In Chapter Two, we discuss the problems concerning the corporate governance structure of China's listed company; prove the necessity and feasibility of the introduction of Independent Directors System. Such problems as the sole great state shareholder, the protection of the interests of middle and small shareholders, inside controller and the dysfunction of supervisory board of directors are the main problems of corporate governance structure system. China's special historical reasons and objective conditions give rise to the abovementioned problems. Most of the listed companies are reconstruct red out of State-owned enterprise. Such listed company has a high proportion of Sate-owned shares and concentrative structure of shareholdings, which leads to aforesaid problems.In Chapter Three, we discuss and analyze the problems in the legislation and practice of Independent Directors System. From the establishment of independent directors of China's listed Company in Hong Kong stock market, to the promulgation of Guidelines on Establishment of Independent Director System of Listed Company enacted by the Security Supervisory Commission, the Independent Director System has been through about twenty years. During this period, the Independent Director System has actively affected the corporate governance.In Chapter Four, we discuss the methods and ways of improving the Independent Directors System of China's listed company. We put forward eight suggestions to solve the problems mentioned above, namely, to clearly stipulate the qualification of independent director, to adopt a feasible procedure in selecting independent director, to grant sufficient powers and functions toindependent director, to cultivate enough qualified talents to serve as independent directors, to establish a profession institution of independent directors, to better cooperate with the supervisory board of directors, to improve the mechanism of rewarding and punishing and to clarify the legal responsibility of independent directors.The development of China's Independent Director System is a process of system innovation. We hope that an effective and perfect Independent Director System will exert an active effect on China's corporate governance of listed company.