The Research And Perfection Of Selction And Appoint Ment Of Independent Director System In China

Under the background of highly concentrated stock equity, our country introduced the independent director system to avoid inside controllers violating medium and small shareholders’ interests. However, in the period of 10-year development, because the system of internal governance did not provide enough support, the independent director has not fully reach the expectation of corporate governance.Independence is "soul" of the independent director system, while selection system is the foundation of "independence" for the independent directors. Only by guaranteeing the independence of independent directors, and avoid any interference of strong stock holder, can we play the function of independent director. The independent director system includes qualifications, selection procedures, salary payment, the proportion of independent directors, tenure and so on. Although the systems has significant importance to “independence”, China’s unscientific current regulations on independent directors system and a lack of unified standards and requirements make it hard to play its role. Due to "A dominant" equity structure, the coexistence of independent director and board of supervisors, capital majority voting mechanism, the implementation of the selected system is hard to be implemented. And in the most basic link, the real "independent" directors are failed to be chosen. This article mainly embarks on present situation of independent directors system in China, analyzing the problems and deficiencies of election and appointment system regulations. The author analyzes the relation between election and appointment system and its influence on independence by combining various factors affecting independent director system. A variety of factors influencing independent directors system is discussed in this paper, including ownership structure of listed companies, coexistence of independent director and board of supervisors, mechanism of majority decisionmaking. At last by referring to three different patterns of experience and deficiencies in the United States, Great Britain, Hong Kong of China, the paper discusses how to protect small and medium shareholders’ interests more effectively through improving the system of selection.There are four sessions in the paper: present situation and problems of selection system, the value and influencing factors of election and appointment system, different investigation patterns of election and appointment system, specific suggestions on perfecting election and appointment system.The first chapter is present situation and the existing problems of the independent directors’ election and appointment system in China. After analyzing the main contents of election and appointment system, the author briefly describes the overview of the current election and appointment system in China. Lastly, the author depicts problems of the election and appointment system in our country at present: Insufficient qualification regulations, the subject of independent directors’ right to nominate is not realistic and the unfair way of electing and voting, the less number and low proportion of independent directors, too many companies and the unsound salary incentive mechanism.The second chapter is the value of the independent directors’ election and appointment system and the influencing factors in our country. This chapter analyze election and appointment system from the perspective of “independence”, the influence of election and appointment system on the value of independent directors and various factors influencing the election and appointment system. The first part is to define “independence” and deal with the role of election and appointment system for independence. The second part is to confirm the value of the independent directors in our country and find out how election system affects the value of the independent director. And the third part is to discuss various factors influencing the election and appointment system: independent directors’ personal factors and company internal factors. Company internal factors include equity structure, coexistence of independent director and board of supervisors, and mechanism of majority decision-making.The third chapter is different investigation patterns of election and appointment system: United States pattern, Great Britain pattern and Hong Kong pattern. By analyzing and comparing the differences between independent directors in China and in the other three places, to learn from the three patterns’ experience and make up our deficiencies of independent directors system in ChinaThe fourth chapter is the suggestions on perfecting election and appointment system in China. Given on the problems of election and appointment system in chapter I, experiences of the United States, Great Britain and Hong Kong and by combining present situation of the corporate governance in China, there are four suggestions: Strict qualifications, reset the selection mechanism scientifically, regulate the number of independent directors and office number, and improve independent director salary incentive mechanism. On resetting the selection mechanism scientifically, the nomination right and office number should be regulated, it is suggested that a nominating committee and a cumulative voting mechanism are to set up. On regulating the number of independent directors and office number, the purpose is to increase the number of independent director and decrease the number of company taking in office. On improving the independent director salary incentive mechanism, it is aimed to strengthen the remuneration independence and set up diversified salary structure.