The Independent Director System Of Listed Companies In China

The independent director system was originated from American in 1930's, and plays an important role in the corporate governance . It plays an active role in improving the corporate governance ,enhancing the corporate performance, regulating corporate operation, and the like. So, from 1990's to now, the successful implementation of the system encourages many countries from civil law system to establishing their own system of independent director aimed at regulating and perfecting corporate governance.For history reasons, most public listed corporations in china always suffer from poor Corporate Governance Mechanism and the interest of the medium and small stockholders are hurt. In order to ensure the interest of the medium and small stockholders, further improve the governance structure of listed companies, standardize corporate governance level, on August 16,2001 China Securities Regulatory Commission issued about guidance opinion of establishing the independent director system in listed companies, which signed that independent director system was formally enforced. According to the guidance opinion, the listed companies have employed the independent directors. But owning to the shortage of relevant law regulation and influences of our country's special political or economic system and social environment, the effect was not as what investors expected. In the sense, the write tables a proposal on how to establish the system.It consists of three chapters: Chapter 1 briefly introduces the definition, the source and the development of the independent director system, analyses advantage and disadvantage of the independent director in the base. Chapter 2 reviews the practice of The System in China's listed corporations. The reasons for the introduction of The System into our law system are analyzed. At the same time, expounds the function of the independent directors and its coordination with the supervision board. In the conclusion part, the article analyses the defects in the system of independent director, discusses the specific running of The System in China. The qualifications for the independent directors, the selection procedure, the duties of the independent directors, the percentage of the independent directors in the board, and the incentive mechanism are discussed. Corresponding measures for the smooth running of The System in China are also proposed.