The Effect Analysis And Legal Improvement Of The Independent Director System Of Listed Companies In China

The independent director system is derived from the country America since the unified system of the corporation with lack of the independent supervisory organization.Therefore they tried to introduce the outside directors to supervise the inside managers.From 1960 sto 1970s,the stock rights became dispersed and the function of the general meeting were weakened.The shareholder central principle was replaced by the director central principle gradually.Then with the rise of the expertise managers the board of the director actually controlled by the managers.That caused the transform from director central principle to the manager central principle.The managers actually hold the power of the management.Thus shareholders could not supervise the managers and the board of the director efficiently and their benefits are infringed.In order to solve the problem of the insider control,more people encourage to introduce outside director.That is the background of the rising of the independent director system.So as to solve the problem of the predominant of one shareholder this special equity structure and be internally compatible,our country introduced the independent director system.In the past decade or so,the independent director system in china did a few contributions to the listed corporations while did not play its due role.This article analysis the operation effect of the independent director system through its two main function—supervisory role and strategic role,and reveal the reason that constrain the positive effect of independent director system.In the end of the part is the improvement and suggestion of our independent director system.This paper analysis the operation effect of independent director system in our country and propose the improvement and suggestion.Part one introduces the emergency and operating mechanism of independent director system.Firstly,introduces the cause and the process of the establishment and development of this system.Meanwhile the paper discusses the operating mechanism including the theoretical basis and the mechanism of appointment and dismissal.In the theoretical basis of the independent director system,three main theories at present are introduced including principle agent theory,stakeholder theory,incentiveand restraint theory.For the mechanism of appointment and dismissal,it discuss the qualification?selection process?percentage ratio and dismissal.Part two analysis the operating condition of independent director system from four aspects including the source of the independent director ? proportion of the number independent director has the high risk and protection consciousness and weak in the aspect of proportion number,valued condition and information acquisition.The beneficial result of the operating condition is not ideal.And the corporations not give the full support to the independent director.Part three firstly discuss the operation effect of the independent director system from the aspects of supervisory and strategic and find that these two functions are not going well.Most of the independent director considers too much about the supervisory cost and slacks off their duty.For the strategic management function,on the one hand independent director prefer not to make mistake than make contributions.On the other hand,the concerned professional background independent director's strategic function is doubted nowadays.Then the paper analysis the reason that cause the problem from three aspects.That is the elements constraint the positive effects of the independent director system.Part four is the improvement and suggestion of the independent director system.Compared to part three and propose the strategy and suggestion.Firstly,establish the full-fledged legal system including the reasonable nominate and election system?improve the incentive and restraint mechanism?coordinate the function between the independent director and board of supervisors.Then establish the strict accountability and insurance focus on the phenomenon that some independent directors are not responsible on their duty.In the end make sure the obligation of cooperation of the listed corporation for the phenomenon that some listed corporations did not give support and cooperate to the independent director.