| The separation of two powers in modern enterprises has lead tothe problem of man-controlling for interior people. Besides, theinconsistency between investors and governors in the pursuit ofbenefit has placed a premium on moral risks among interior people. Inorder to safeguard the benefit of shareholder and carry on check andbalance towards interior people, the coordinating and supervisingmechanism of enterprises has come into being. When exercising theunified leadership in enterprises, supervisory board hold executingand supervising function. This self-surveillant way affects supervisoryeffect, so independent directors supervises is introduced to thedirectorate, which sets up supervisory board to check and balance thedirectorate in the dual governing structure.The main functions of independent directors consists insupervising the decision-making and finance of firms, establishing thesalary and reward of the directors and managers, and nominating thedirectors as well. This mode of supervising achieves the performance ofsupervision, exterior supversion and the supervision towards the processof decision-making as well. Supervisory board mainly engages in thesupervision of the finance, in addition, making judgement andinvestigating responsibility towards the directors and the advancedmanagers in the company, which has the characteristics of supervisionduring and after the affair. Theoretically, independent directors andsupervisory board are obviously complementary, which combines thebefore-hand supervision and afterwards supervision together,intergrating the exterior and interior supervision as well.The listed company in China has adopted the dual corporategovernance structure, and supervisory board is its traditionally interiorsupervision department. With a view to making up for the supervisoryflaccidity and meeting the demand of entering international market, China has introduced independent directors in 2001. The listedcompany has developed into coexistence of the supervisory boardsystem and independent directors system, which can, theoretically,solve the problem of supervisory flaccidity because of the lack ofprofessional knowledge, but also enhance the objectivity ofsupervision. Supervisory board can remedy the weakness of theindirectness from the independent directors and non full-time nature.However, the practise effect of this supervision mechanism is notoptimistic enough.There are many reasons resulting in the failure of coexistence ofthe supervisory board system and independent directors system, but asa co-supervision system, its main reasons lie in lacking full andrational conformity without realizing their perfect embedding in bothsystems. The emerging problems mainly rest with the overlappingsetup, ambiguity duties, no communication, no mutual assistance andthe inharmonious collaboration of the two systems. The possiblesolution is to rationally distribute authority, to build upcommunicative mechanism, and to improve obligation mechanismbetween supervisory board system and independent directors system. |
