Actual Puzzledom And Validity Analysis Of Independent Directors

Institution of independent directors has worked for thirteen years in our country. But it has many problems that it didn't meet in USA and EURO. In October, 2005 independent institution was listed in the corporation law. Every public company must have this institution. In this paper we analyze the problems and validity of it .And in the final we give the advices to improve this institution.ⅠHistory and reality of our country's independent institution We can look back to 1993 when public company to build this institution. The initial purpose is to be fit to the need of company that comes to oversea market. Tsingdao beer is the first company to build institution according to the rule of Hong Kong securities market. China SEC issued public company guide in December, 1997.This guide pointed out that company can build independent directors according to the need of company.For protection to weak investor, China SEC issued guide of independent directors to public company. Every public company must build this institution. But the situation is not very well. The survey of independent directors showed the problems of it.ⅡHistory and comparisonFirst, HistoryIndependent directors institution began from USA in 1930.The initial purpose aimed at the problem of control by insider. USA SEC gave advices to build independent directors.Second, ComparisonIndependent directors institution developed with corporation institution. The main corporation institutions have two kinds. One is controlled by market; the other is controlled by sharer. And there has another kind of East Asia that be controlled by family.ⅢTheoryFirst, Problem of traditional corporation institutionPeople built the traditional corporation institution to solve the problem of incomplete contract.Second, Analysis of Abroad Theory...