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Transplantation and localization of the independent director system

Author: LiZuo From: www.yourpaper.net Posted: 2009-06-28 00:28:56 Read:
Abstract: Through the contrast of the something was independently directors system, China should be noted that the independent director system is perfect.
Keywords: East and West; independent directors; perfect

East-West system compared

Independent system in order to more thoroughly dissect the pros and cons of the localization process and its transplantation, you must first understand the "soil" of the system of things was independently been nurtured differences, avoid brought in wholesale transplant of the Anglo-American system of independent directors, "South Orange North trifoliate, better design of the independent director system, give full play to the functionality of the system.
Comparison of Chinese literature review 1.1 macro
(1) a unitary structure of corporate governance in the United States, the board of supervisors to rely completely on the Board of Internal Oversight, unable to achieve the effect of supervision. In order to improve the confidence and the credibility of the Board to monitor the shareholders' long-term investment, the establishment of independent directors to become a necessity. The independent directors of the company in the United States actually play the role of the Board of Supervisors in Chinese companies, supervision of operations management. Our company governance structure of the dual system, the Board of Supervisors is the supervisory authority of the traditional, just because of the obstacles, failed to give full play to the role.
(2) independent director system in the United States is built on the basis of equity revolution, the equity is widely dispersed, and there is no "dominance" phenomenon, thus listed companies will tend to the many shareholders of mutual understanding; circulation all due to equity investment rarely is the same for a long time, in order to profit oriented to adjust the shareholding structure of thus form social evaluation mechanisms of the market-oriented and "voting with their feet" and "hand vote combined equity checks and balances. In China, the equity structure of listed companies over-concentration of the largest shareholder of the Board of Directors excessive infiltration of related transactions phenomenon is particularly prominent. The introduction of the independent director system's purpose is to address listed companies internal human control serious but China's actual situation listed companies "insider control" control of the controlling shareholder, the state-owned shares basic in line political equipped and do not have an established market and profitability targets, the independent directors how to cope with such a strong executive power and administrative mechanisms is indeed a challenge.
(3) the effective play of the role of the independent director system is built on a significant group essentially. Externally, there is a long-established market for managers ensure elected independent director of talent smooth because of market choice and competition in the market to the formation and play a role in the reputation mechanism, and promote the independent directors to be bound by these mechanisms loyal prudent to perform its functions. Both in the number of independent directors in the internal or voting rights has advantages, which makes independent directors can objectively express their wishes to play a supervisory role. China, the independent director system is just getting started, belonging to vulnerable groups, it is difficult to function effectively.
1.2 microscopic comparison
From the "guidance" of the SFC, the independent director system in China and the United States in the specific system design is similar to but because of the different national conditions as well as company practice, there are still some differences.
(1) from the point of view of the judgment of the independent directors' independence standards, the guidance under the independent judgment tend to the independence of the independent directors in the social relations, such as "guidance" 3 1,2,3. More emphasis on independent directors in the interests of the relationship between the independent U.S. rules, such as requiring independent directors shall be a senior employee of the Company, shall not significant transactions and the company, which is precisely the lack guidance.
(2) from the terms of reference of the independent directors to act, the guidance has been given considerable powers of independent directors, which can be seen from the 5, 6, 7, but whether the independent directors can fully exercise their rights is still unknowns, the board of directors of the U.S. division of labor is relatively clear, remuneration, nomination and audit committee is the common committees of the Board, the independent directors constitute a majority of these committees or even all, independent directors can fully play its role, and contrary to the situation in China.
(3) independent directors of the company in addition to the exercise of supervision, strategic planning and business development company also played an important advisory and consultancy role. Carry out the provisions of this guidance is not, I think this is a defect, guidance should be a comprehensive description of the role of independent directors, but not limited to a supervisory role.

Two pairs of Independent Director System in China

2.1 for the institutional arrangements for independent directors to modify
(1) strict qualifications of independent directors, strengthening management, accounting, financial, legal and other professional knowledge and practical experience requirements increase banned terms expressly prohibited to employ personnel do not have the expertise and experience to serve as independent directors while the provisions listed company staff must not cross as an independent director.
(2) modify the nomination and election of independent directors rules to prevent the control of the largest shareholder. The generation of independent directors to consider three modes: major shareholders the right to nominate, but the right to vote; major shareholders have the right to nominate, but not vote; neither nomination rights of the largest shareholder, without the right to vote. The company can select three modes depending.
(3) expand the powers of the independent directors, such as the power to hire external auditors, review of related party transactions of power, the veto power on major policy decisions, the right to financial review, the cost of the expenses borne by the company. Establish the working procedures of the independent directors, the establishment of an independent director of relief measures, the entity powers through specific reality, as given in the Companies Act, the same independent directors and supervisors have proposed the convening of the rights of the shareholders' meeting.
(4) to strengthen the terms of the responsibility of the independent directors of independent directors is responsible for the authenticity of the company's financial statements, to enhance the dereliction of duty of the independent directors should bear administrative responsibility, civil liability and criminal liability, at the same time to establish and perfect the system of shareholder litigation, such as the company Act 152, 153, can clear the shareholders of the right to sue independent directors
(5) increase the exemption clause, the terms of the choice of independent directors liability insurance system changed to mandatory terms, and to regulate the specific operation of this system, in order to reduce the risk of faithfully perform the duties of independent directors.
2.2 Independent Directors and the Supervisory Board
Currently, there is a big controversy on the relationship between independent directors and the board of supervisors, the theoretical and practical circles. Some people think that the introduction of independent directors in conflict with the provisions of the Companies Act, caused by the overlapping functions of the independent directors and board of supervisors, buck-passing, passing the buck irresponsible embarrassment of practice. Some people think that the board of supervisors system should be abolished in name only, change the binary system of corporate governance structure, a system to emulate Anglo-American model of corporate governance, and rely on the power of the independent directors of the constraints of the executive director, manager layer. Some scholars believe that, at the same time stressed that moving things members of self-restraint, to shareholders of individuals and the general meeting of the company monitoring should certainly set up a special independent oversight bodies - the Board of Supervisors of the necessity
I personally think that the two systems should be eclectic set of independent directors is still necessary, the Supervisory Board and the independent directors, while there is not a contradiction. First, the supervision of the Board of Supervisors is the external oversight of the management team, and the specific terms of reference are defined in the Companies Act, the supervision of the independent directors is self-monitoring of the management team within the supervision of the board of supervisors; Secondly, during and after supervision has after the inspection and corrective role, supervision of independent directors prior supervisory role; once again, the Board of Supervisors of the content focuses on the supervision of legality, the reasonableness of the company's decision-making board of supervisors usually can not put forward different views of independent directors on the reasonableness supervision issues.
So, we should on the one hand the perfect board of supervisors system based on the introduction of the independent director system, correctly handle the relationship between the two, the appropriate functions of positioning, can play a role both in the corporate governance. The specific operation is as follows, the Board of Directors consists of a majority of audit committee composed of independent directors, with the board of supervisors to fulfill their supervisory functions. Regular communication of the main functions of the Audit Committee shall be the day-to-day financial supervision and risk control; audit committee should be found in the course of the exercise of his powers as timely notification to the Board of Supervisors, so that the Board of Supervisors to take timely measures; Audit Committee should be established and the Board of Supervisors mechanism, in order to better match fulfill their oversight responsibilities. As for the nomination to hire the terms of reference of the external auditors, the audit committee should also be entitled to, and facilitate the external audit firm's financial.
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