Study On The Perfection Of The Independent Director System Of Listed Companies In China

Independent director originated in the United States, and then it had been drawingmore and more countries because of its positive role to play in corporate governance. Inthe1990s, there had been many issues like dominance, internal control and supervisorycommittee’ useless which had brought great harm to listed companies of China inChina’s long-standing corporate governance process. To solve these problems, Chinabegan to introduce the independent director system, hoping to improve the corporategovernance structure of listed companies. Independent director system has an extremelyimportant significance in solving our dominance, internal control, supervisorycommittee’ useless and enhancing the market competitiveness of listed companies, andit plays a pivotal effect in the maintenance of minority shareholders’ rights and theimprovement of the corporate governance structure.In this paper, the author gives a detailed exposition of the origin of independentdirector by treating the concept of independent director as a starting point. After a clearunderstanding of the independent director,the author made a detailed introduction of theintroduction background and legislative practice of independent directors, and thenpointed out sorts of shortcomings of independent director system of listedcompanies.Finally, on the basis of comparing independent director system of China andthe U.S., the author proposes recommendations of improving the independent directorsystem and formes her own innovative ideas, which mainly include the followingaspects: firstly, focus on how to motivate independent directors to participate indecision-making and effective supervision and what incentive mechanism should beestablished, and then gives a incentive model of combination of fixed wages andsalaries deferred payment; secondly, the author conducted in-depth study of of theindependent director’liability issues,proposing to establish a strict rule mechanism: civil,administrative and criminal as a whole. Meanwhile,to enhance the enthusiasm andreduce the risk of independent directors to perform their duties, the author also proposesthe introduction and improvement of liability insurance of independent directors.Thirdly, there has been conflicts and overlaps in the oversight function of thesupervisory committee and independent directors, the author profound theoretical analysis on the boundaries and the functional distinction of independent directors’dutiesand supervisory committee’duties in the article,and then proposed her own perspective:independent director is in charge of external oversight and the supervisory committee isresponsible for internal oversight.