Obstacles And Countermeasures Of Independent Director System In China'S Listed Companies

In August 21, 2001, the China Securities Regulatory Commission formally issued the guiding opinions on the establishment of an independent director system in listed companies (hereinafter referred to as "Guidance Opinions").

The document requires that the board members of a listed company should have more than 1/3 as independent directors, including at least one accounting professional. All listed companies within and outside the country should amend the articles of association before June 30, 2002 and appoint independent directors.

This means that independent directors, as an important system for regulating and improving the governance structure of listed companies, are moving cautiously and actively into China's listed companies.

The necessity of introducing independent director system in China's listed companies is a necessity. The independent director system, as an effective institutional arrangement in the corporate governance structure, is becoming a world trend. For example, the stock exchange and the Nasdaq market have fully implemented the independent director system.

According to the OECD survey conducted in 1999, the proportion of independent directors in the board of directors was 62% in the United States, 34% in Britain and 29% in France.

According to the research report published by Cohen Ferri International (Kom-Ferry) in May 2000, the average number of board of directors of Fortune 1000 companies was 11, the number of independent directors was 9, accounting for 81.2%, and the number of directors was only 2, accounting for 18.2%.

This phenomenon is by no means accidental.

It is the inevitable choice of economic development and the continuous maturity of capital market.

The so-called Independent director refers to the directors who are not in the same position as directors in the company where they are directors, and has no close relationship with the company and the managers in terms of economic or related interests.

According to the guiding opinions, the independent directors of listed companies refer to other duties not held in the company except directors, and there is no director of the listed companies and their major shareholders who may be hindering their independent and objective judgement.

Independent directors are not subject to the controlling shareholders and management of the company. They use this detached position to inspect, evaluate and supervise the management of the company, so as to effectively control the controlling shareholders and supervise the operators, ensure that the Board considers the interests of all shareholders, reduces insider control and manipulation of large shareholders, and effectively protects the interests of minority shareholders.

At the same time, active independent directors can improve the independence and objectivity of the board.

Bringing external knowledge, experience and relationship to enable the board of directors to exercise their functions independently, promote knowledge pformation and contact potential customers; enhance pparency of the board of directors, make it easier for external parties to understand their decision-making process, attract outstanding partners and potential investors, and also play an important role in a series of major decisions, such as the board of auditors and the Remuneration Committee, which need to be carried out independently.

At present, listed companies in China are affected by the planned economy and special ownership structure for a long time. The corporate governance structure is still not perfect, and the interests of minority shareholders can not be effectively protected.

根據(jù)上交所1999年底對滬市上市公司進(jìn)行的公司治理的調(diào)查，行政權(quán)力對上市公司的控制相當(dāng)嚴(yán)重，被調(diào)查的235家公司中有145家表示有主管部門，占有效回答總數(shù)的61.7％；股權(quán)的集中程度比較高，僅國有股、法人股的比例就達(dá)60％以上；董事會的“內(nèi)部人”現(xiàn)象比比皆是，70％左右來自股東單位的派遣，來自第一大股東的人數(shù)已超過董事會總?cè)藬?shù)的50％；監(jiān)事會的成員大部分由工會主席和職工代表構(gòu)成，73.4％的樣本公司的監(jiān)事會主席是從企業(yè)內(nèi)部提拔上來的，監(jiān)事會成員不熟悉財務(wù)規(guī)則已經(jīng)成為比較普通的現(xiàn)象；公司的首席監(jiān)督者-董事長與首席被監(jiān)督者=總經(jīng)理兼任的現(xiàn)象比較普通，實(shí)際上是自己監(jiān)督自己，自己評價自己；獨(dú)立董事僅有8人，占被調(diào)查總數(shù)（2928人）的0.3％。

According to statistics, as of the end of April 2001, the largest shareholding ratio of the 1102 A share listed companies in China was as high as 44.68%, of which more than 50% reached 890, while the average shareholding ratio of the second largest shareholders was only 8.22%, which was less than 1/5 of the largest shareholder.

So that most of the listed companies in China at present are not only the failure of the board of supervisors, but also the board of directors is in a virtual position.

These situations indicate that in the main board market of our country, the construction and improvement of the corporate governance structure is still a arduous task, which requires a long and even arduous effort.

Therefore, the introduction of independent directors into the board of directors of Listed Companies in China plays an important role in perfecting the functions of the board of directors, improving the corporate governance structure, ensuring that the Board considers all shareholders' interests, reducing insider control and manipulation of large shareholders, and effectively protecting the interests of minority shareholders.

It is more urgent to introduce independent directors in China's upcoming gem market.

Because the main listing objects of gem are small and medium-sized enterprises, private enterprises and high and new technology enterprises, most of these enterprises are founded by entrepreneurs. Entrepreneurs and their relatives usually have a higher proportion of shares of enterprises. Entrepreneurs generally also serve as general manager and chairman of the company. Most of the board members are from relatives and friends of entrepreneurs. Therefore, the phenomenon of insider control is more serious.

In view of this situation, it is particularly urgent to establish a standardized corporate governance structure and introduce independent directors into the board of directors to supervise and balance the insiders.

Two, the obstacles to the implementation of independent director system in China's listed companies. At present, the introduction of independent directors has played a certain role in the development and standardized operation of Listed Companies in China.

However, after all, the independent director is still a new thing in our country. How to operate it is still in the exploratory stage, and there are still many problems and obstacles in practice.

In the absence of relevant laws to support the company, the existing company law does not give the independent directors in the true sense the space and conditions for existence.

In the United States, independent directors rely on the law as the "sword of the Shang Dynasty".

It is possible to pform the independent will of the independent director into the will of the board and even the company.

China's current law does not give the independent directors special voting rights, and the number is not dominant. It belongs to the disadvantaged group, so it is difficult to check and balance with the company's internal directors.

The reform of independent directors in China can not be completed by relying solely on a "guidance opinion". Relevant departments and people of insight need further exploration.

(two) the stock market structure of "a single largest shareholder". The listed companies in the US and the UK are in the market led securities market, and the ownership structure is very dispersed.

The largest shareholder of American companies is some institutional investors. They often account for 1% of the shares of a company in a particular company and thus have very limited voice.

In addition, the Investment Company Act (1940) also stipulates that the shares held by life-insurance company and mutual funds must be decentralized, which also leads to the high liquidity of US equity.

Because of the large number of small and medium shareholders in American companies, the problem of free riding in company supervision is also generated.

Therefore, the United States and Britain set up independent directors to supervise functions in the board of directors, and their total supervision costs are shared rationally by all shareholders of the company.

At present, the current situation of corporate governance in China is highly concentrated stock ownership. State owned shares generally occupy a controlling position. Although the board of directors is generated by the general meeting of shareholders, the controlling shareholders have absolute strength.

At the same time, the manager's appointment by the board of directors depends, of course, on the will of the controlling shareholders.

Therefore, the insider control of Listed Companies in China is "insider control" in the pition, which is essentially different from that in the Anglo American countries, and the solutions and means are different.

At present, the main problem of corporate governance in China is the controlling shareholders' encroachment on the assets of listed companies by means of related pactions, such as guarantee, accounts receivable, asset replacement, and so on. The solution to insider control is to create new "outsiders" through the reform of the property right system.

Therefore, the promotion of independent directors in China must first make them not subject to controlling shareholders when exercising their power. This requires that we create the shareholding structure foundation of the independent director system, that is, to realize diversification and decentralization of equity structure and to strengthen the liquidity of equity.

(three) the introduction of independent directors is incompatible with the board of supervisors system in China. The independent director system originated from the common law system of the United States and Britain. The shareholding organizations in these countries generally adopt the "one yuan" board structure, and there is no independent board of supervisors in the company structure. Therefore, by strengthening the independence of the board of directors and introducing the independent director system, we try to improve the supervision mechanism in the existing "single tier" framework, so that the board of directors can perform supervisory duties on the management of the company so as to regress the shareholder control.

In our company legislation, we adopt the "two yuan system" structural system of the continental law system, that is to set up the board of directors and the board of supervisors under the general meeting of shareholders, exercising the power of decision-making and supervision respectively.

The board of supervisors is specially designed to protect shareholders' interests, supervise the board of directors to carry out resolutions of shareholders' meetings, supervise directors and managers.

In this way, if the independent director system is introduced into China, it will conflict with the existing supervisory board system in many aspects, and even weaken the functions of both sides.

How to divide the powers of independent directors and board of supervisors is worth discussing.

After the introduction of independent directors, how to coordinate the relationship between independent directors and board of supervisors has been evaded by the Shenzhen Stock Exchange's Listing Rules of gem. The Shanghai Stock Exchange's guidelines on corporate governance have both given financial inspection power to both sides, resulting in dual supervision. The result can only be a waste of resources or mutual evasion; the SFC's guidance does not mention the relationship between independent directors and the board of supervisors.

According to the guiding opinions, four members of the board of directors of Listed Companies in China should include at least 2 independent directors. Before June 30, 2003, the board members of the listed companies should include at least 1/3 independent directors.

To achieve this goal, we also need a large number of professionals who are interested in engaging in the work of independent directors to join the independent director reserve team.

Even at 2 listed companies, there are at least 2000 places vacant.

At present, most of the independent directors appointed by Listed Companies in China are technical experts, which is not related to the lack of professional standards and professionalism.

As far as talent reserve is concerned, there is no sufficient number of independent directors at present. In terms of talent selection, there is no chance for potential and independent directors to receive professional training and education.

The most important function of independent directors is to improve the corporate governance structure. Only technical experts who are proficient in the main business of the company to serve as independent directors are far from enough. Especially when the ownership structure is very unreasonable in China, listed companies not only need technical experts to make suggestions for the company's development strategy, but also need relatively objective independent directors to play a supervisory role in corporate governance, capital operation and enterprise management, so as to achieve the purpose of improving corporate governance structure and protecting the interests of small and medium-sized investors.

The market selection mechanism and evaluation system have not yet formed the driving force for the independent director system. One explanation is the reputation mechanism. Once the independent directors show considerable independence and objectivity in the listed companies, they will greatly protect and enhance their reputation and expand their future market, which indicates that reputation capital is extremely important in the labor market of the board of directors. Five.

In market economy, the formation and improvement of market selection mechanism and evaluation system is the prerequisite and fundamental guarantee for the independent director system to play its role.

At the present stage, due to the short time of establishing and cultivating the market economy system in China, it will take a long time to perfect it. At the same time, the development of the manager market, especially the highly competitive manager market, is still at the initial stage, and the resources of entrepreneurs are scarce.

Correspondingly, the independent directors themselves are relatively lacking in the experience of enterprise management under the market conditions, and the "goodwill" system of the independent directors hardly exists.

In the absence of credibility, such as certified public accountants, brokerages, lawyers and other intermediaries, and jointly deceiving investors, it is difficult to make the independent directors play a supervisory role.

At this stage, when exercising the supervision power and deceiving the small investors, the rational independent directors may falsification or omission.

Three. The effective operation of the independent director system in China's listed companies.