The Realization Of Independent Directors' Function In China

The independent director system is first established by Britain and American in order to make up for the defects of the "one system" corporate governance structure, the main purpose is to prevent the "control of internal man" out of control, and improve the effect of corporate governance. Because of its effectiveness in the practice of corporate governance, thereafter the independent director system become the global focus while other countries studying how to reform and improve the corporate governance structure. Then to optimize the corporate governance structure of our country, and to address the prevalent problem (which caused by the phenomenon of the "the only big shareholder" that exist in many listed companies in our county) that the controlling shareholder hollow out the listed companies and infringe the interest of the small shareholders, our country also introduce this system. The practice has proved that the independent director system had indeed made an effective role in improving the existing corporate governance structure, in constraining and supervising internal managers and in making corporate decisions, etc. However, the operation of independent directors in China also has exposed many problems and shortcomings, still can not get rid of the name of "Vase Directors" and "Signature Directors". So we need to study further in how to establish this system in our country as to address our problems. This paper will link the actual conditions in China to locate the independent director's functions and to study how to realize the functions, and further put forward some ideas and suggestions on these problems.This paper is divided into three chapters. The first chapter is mainly to locate the function of the independent directors. Firstly, it studied the relevant laws and regulations about independent directors' functions of Britain and American, and then discussed the location of functions of independent in the two countries. Secondly, this paper discussed the location of functions of independent director in China based on its actual national conditions. At the same time, this thesis also analyzed the functions of independent directors from the relationship between the supervising border and independent director system.The second chapter analyze the status of independent director system in China and discuss the conditions which impact the operation and realization of functions of independent directors in China from following three aspects:the legislation of independent directors;the independence of independent directors and the environment of exercising the power of independent directors.The third chapter studied the effective ways and methods in guaranteeing the realization of the functions of independent directors in China's listed companies. This paper put forward suggestions from four aspects based on the problem that existed in the practice of independent director system. These suggestions were divided into following four aspects:to improve the legislation system and set up a suit sound and perfect laws and regulation for independent director system; to improve the regulation in qualification and selection system of independent director system; optimize the power exercising mechanism of the independent directors and establish a sound incentive and restraint mechanism for independent directors.The course of setting up independent director system in China is also a trial course to improve and optimize the independent director system. We hope to see an efficient, comprehensive independent director system to play a due role in the process of improving our governance structure in China's listed companies.