Certain Problems And Improve The System Of Independent Directors Of Listed Companies In China

Content: Independent director system is an important system arrangement in improving corporate governance structure, strengthening effective control for insiders, protecting interests of companies and the small and medium shareholders.The establishment and development of independent director system in listed companies in China is a top to bottom process, instead of a result which the listed companies did willingly or the capital market self-developed. Although independent directors have played some important roles in correcting governance unbalance in board of directors, vindicating the interests of the small and medium shareholders, promoting information disclosure, enhancing clearance and rationality of important decisions of companies, the problems are very serious and obvious, such as non-independence and non-well-known, which greatly affected the actual operation effect of China's independent director system. The main reasons are related to some factors, including in the faultiness of law and regulation, poor function of board of directors, absence of professional manager market, unfounded system of individual credit appraisement.This paper aims at strengthening independence of independent director and exerting their functions. According to the theories of corporate governance and motivation, it proposes two suggestions on perfecting independent director system in China's listed companies:one of them is to ensure independence of independent directors through law systems and coercive measures of industrial organization; another is to make independent directors to do their duty well and exert supervision function through proper motivation and restriction mechanism.Therefore, the further measures include several aspects. Firstly, in order to vocationalize independent director, the national industrial association of independent director should be set up; secondly, it is necessary to consummate independent director market access mechanism, and stipulate the qualifications of independent director; thirdly, the independent directors of hiring mechanisms should be improved, including nomination procedures and electoral process; fourthly, management of the time and energy of independent director into the listed companies also should be improved; fifthly, proportion of independent director should be forced to increase when poor performance of the listed companies; finally, reputation mechanism of independent director should be consummated as well.