Research On Establishing The Independent Director System For The State-owned Corporations In China

The independent director system can perfect the corporate governance structure and avoid some problems like "controlled by people inside" through the method of adjusting the board structure, which comes from America. Since there are similar problems existing in China state-owned corporations, it is significant for China state-owned enterprises reform to utilize the system into these enterprises.The paper consists of four parts: the first part states the basic theory of firstly explain the conceptions about inside director, outside director and independent director. Then briefly analyses the features and functions of independent director. Finally describes the meaning of the independent director system for the state-owned corporations and gives a concise explanation on the relation and difference between the independent director system for the state-owned corporations and the independent director system. The second part introduces the main contents of foreign and Hong Kong Special Administrative Region's independent director system. This part takes America , England and Hong Kong Special Administrative Region as examples to systematically introduce the independent director systems on qualifications , appointments and removals , insurance, payments, rights and obligations. The third part discusses the necessity of establishment of the independent director system for the state-owned corporations in China from the aspects of its function, the problem of the state-owned corporations' corporate governance in China and feasibility of the independent director system for the state-owned corporations in China from laws, polices and implementing conditions on systems , relationships with present supervisory system and whether it can avoid its problems which had appeared or not etc. The last part provides some suggestions on how to establish the independent director system for the state-owned corporate concerning its location, systems, qualifications, appointments and removals , insurance, payments and so on. The independent director appointed by the state-owned assets supervision and administration authorities is the broad member of the state-owned corporations. It can play a key role in supervising management and provide more professional and scientific decisions by taking part in corporations' management and policy decision.The independent director for the state-owned corporate stands for interests of the country , corporate and the society. It perfects the corporate governance structure of the state-owned corporations and promotes its healthy development together with otherdepartments and forms a logical entirety through cooperating and controlling each other. However, the system should link up with the present corporate law and regulation to form its own regulation and system. While the qualification standards should include the independent standard and standards in morality and competence level equally and the proportion of the independent director for the state-owned corporate should be bigger than half in board , and no less than two persons. They can compensate each other and should have strict term of office to ensure their independence and avoid being assimilated. The cross term of office system should be set up to maintain its stability and successiveness in management and policy decision and insurance system should also be set up in fields like profession, information and expenses and so on. The directors' pay needs a unitied standard according to their work time> risk and responsibility > their achievement checked by the state-owned assets supervision and administration authorities and paid in a way of combining fixed payment and partly of them delayed . For those relatively centralized corporations, specialized organizations should be set up to carry out the director's select n appointment > evaluation > training ^ and daily management. Their checking and evaluation system and responsibility should be clear and we need a strict supervision system for these independent directors for the state-owned corporations.