Independent Director System In China And Its Countermeasures

It is one of most important targets of china economic systems reform that establishing modem enterprise institution in Chinese enterprises. It is also one of the requirements of accommodating new situation that world economy has showed the tendency of globalization. The core of modem enterprise institution is corporate governance. An excellent corporation has an effective mechanism of corporate governance. The key work of establishing modern enterprise institution is formatting an effective mechanism of corporate governance in Chinese enterprises, especially in the listed companies of China, which are looked as the models of the modem enterprises in China. The Company System of independent director is a kind of company management system originated in America in the 1960's or 1970's. It is necessary for improving the company administrative structure, strengthening the effective supervision of its personnel and protecting the interests of whole company and middle or little shareholders that independent director system comes into being. The Company System of the independent director is wide spread adopted by many countries now.As an innovation, the independent directors' regime finds its value in the following aspects: firstly , it has an effective supervision on the insider control within the framework of corporate governance; secondly, it upgrades the decision making capability of the board of directors; thirdly, it promotes the transparency of operational and fiscal affairs by strengthening the information disclosure. Emphasizing the basic function, China securities and administration Commission has decided to promote the Company System of independent director by August 2001, our country is practicing this new system. Owing to the shortage of relevant law regulations and influences of our country's special political or economic system and social environment, the system of independent director didn't work well in our country, so that some people asserted that the system was not suitable to our country and denied the establishment of this system in our country. This article thinks that thedifficulties the system is facing in our country now can't become the reasons to deny this system because environments are changeable and system can be creative. As long as we study the system thoroughly and modify it according to our national conditions: this system can surely work well.This article is divided into three parts, in which the theory and system frame of the independent director system are systematically expounded. In the first part, the article mainly explains the basic meaning, emerging and development, basic theory , China's introduction and running of the independent director system. The second part of the article points out seven problems of this system emerging in the practice and the reasons of these problems, providing base for the further analyzing. The third part elaborates perfect measures of the independent director system synthesizing aforesaid seven questions' analysis, standardizing the employment and unemployment system of the independent director, increasing the ratio of the independent director in the board, making definite and strengthening function of the specific committee attached to the board, coordinating . the legal conflict between the independent director and the board of supervisors, completing drive mechanism of the independent director, trying to ensure the independent director to get enough information , straightening out the independent director's authority, the duty and the responsibility relations as far as possible .At the same time ,the writer proposes to synthesize these measures to establish and complete the independent director system and believes that so established independent director system should be able to occupy the small space in the corporate governance mechanism.