Research On Corporate Governance In The Perspective Of Power Separation And Balance

Scientific and reasonable governance norms are the powerful guarantee for the operation and development of a company. Although the current corporation law in our nationality establishes the specific and normalized operation mechanism for different institutions in form and content, taking a solid step toward the governance mode of power separation and balance, there exists only seeming power separation but no virtual check and balance. In accordance with the theory of power separation and balance, the final goal of power separating would include power division, personnel independence and institution separation. Power division is the fundamental factor and prime premise of realizing power check and balance; personnel independence is the inevitable requirement for guaranteeing the power separation of all stakeholders; institution separation is the result of balancing the company's interests among all stakeholders. Therefore, a company must ensure the effective separation of power, personnel and institutions in order to authentically achieve the power separation within it.Corporate governance of listed companies in our country presents the status of power separation without check and balance generally, showing the outstanding characteristics of predominant shareholder and existing control chain. On legislation, the power boundaries between board of shareholders and board of directors are not clear in the corporation law of our nationality, resulting in the phenomenon that board of shareholders intervene directly in the affairs of board of directors and board of directors surpass their authority to exercise the decision-making authority of board of shareholders in actual operation of the company. The fuzzy power boundaries between board of directors and managers will inevitably enlarge the authority of managers and narrow the authority of board of directors relatively, influencing the decision-making and execution of routine works. The fuzziness of power boundaries between board of supervisors and independent directors will further weaken the existing supervision mechanism of the company, causing a monitoring blind area for fractional power subjects.The realization of check and balance should be based on ensuring the effective separation of power, personnel and institutions. However, check and balance mechanism among institutions of a company in our country lacks relative independence, and only separates power seemingly. Though independent supervision institution is established and independent directors are imported, authentically separation of power and institutions haven't been realized, let alone achieve check and balance. As to personnel independence, major shareholder who owns strong power will choose the “right man” or themselves for some important positions including chairman and general manager. By the way of personnel decision, major shareholder controls the whole company directly or indirectly, while the plurality of chairman and manager position will make company manager avoid the powerful supervision from other shareholders. Consequently, major shareholder and manager gain profit from the listed company furtively. As to institution separation, board of shareholders has too much power. Controlled by major shareholder, board of shareholders will become the tool for major shareholder manipulating the company, while board of directors will become the department for major shareholder acquiring private benefit. Under this power situation, if supervision system within the company's is completely attached to the manager, it will lose efficacy eventually because of direct or indirect intervening from the major shareholder, and supervision right will be unable to check and balance managing right.This paper analyzes the effect theory of power separation and balance on corporate governance in the perspective of modern company and modern country, and compares the power restriction mechanism of corporate governance within western countries. Finally, improvement measures are proposed in allusion to the status of power separation and balance in our country and existing problems, in order to provide legal advice for reasonable improvement of power separation and balance mechanism of corporate governance in our country.