Incentives Of Independent Directors Of Legal Thinking

The Independent Director System originated from American corporate governance is a good way to solve the problems caused by separation between ownership and management in modern companies. By the performance of independent directors, companies can supervise inside directors and the management personnel so as to reduce the"insider control"and improve the corporate governance, at the same time protecting the benefits of the minority shareholders. The status of independent directors is improving in Modern corporate governance principles. In 2001, China's securities authorities released regulations on establishing an Independent Director System for listed companies. The purpose of introducing the independent director in China is to solve the problems of"only one big share"and"insider control"posed by the separation between ownership and management. The Independent Director System has played an important role in corporate governance during the past ten years. However, there are some Defects in China's Independent Director System, due to the fact that the supervisory role the independent directors plays is not as outstanding as expected. Why could not these independent directors play an effective role in China? The key issue lies in the fact that the Incentive Mechanisms for Independent Directors are insufficient to motivate or constraint the independent directors to work. In other words, there is no motivation or pressure on the independent directors to participate in the activities of the board. Therefore, research on the Incentive mechanisms for independent directors is of great significance for the improvement of Independent Director System and the corporate governance as well as for the protection of the minority shareholders and the development of the whole company.This thesis retraces the reasons and conducts a comparative and Interdisciplinary Study on the establishment and improvement of the Incentive Mechanisms for independent directors in china. This thesis consists of three parts. Part one is the theoretical framework of the Incentive Mechanisms for Independent Directors, including the basic concepts features, functions, and contents of the Independent Director and the Incentive Mechanisms, and the necessity for the establishment of Incentive Mechanisms for Independent Directors. In part two, this thesis presents the regulations and the practical experience of the Incentive Mechanisms for Independent Directors in different countries and regions in terms of Reputation Incentive Mechanisms, Remuneration Incentive Mechanisms, Liability Insurance Incentive Mechanisms and Legal Liability Incentive Mechanisms, so as to enlighten the research on the design of the Incentive Mechanisms for Independent Directors in China. In part three, this thesis focuses on the legislation and conduction of the Incentive Mechanisms for Independent Directors in China and problems involved. By analyzing these problems, this thesis proposes some practical suggestions on how to set up an appropriate Incentive Mechanisms for Independent Directors in the distinctive Chinese environment.