Role Of Independent Directors In Chinese Companies

Role of Independent handlers in Chinese Listed Companies

Introduction

The origin of separatist conductors could be traced back to the history of United States company development. oddly after the fall of Enron, regulator realises the importance of protecting shareholders from heed manipulation. There is no similar incident in China, still the Chinese watchdog was eager to introduce the separatist director system to China. Since 1997, China Securities Regulatory Commission (CSRC) has been continuously functional on publishing guidelines and opinions to bring independent directors to Chinese listed companies. # Among these measures, the almost influential one is the Guidance Opinion on the introduction of an Independent Director System in Listed Companies (Independent Director Opinion or Opinion) which was issued on 16 overbearing 2001. The following discussion will be largely found on the Independent Director Opinion to argue that the independent director system has failed to operate as expected in China.

Situation in China

Before moving on to prize the independent director system in China, it is necessary to delay a basic understanding of the overall market situation. It is grave to expect a beautiful plant will assume up if we sow a seed yet having no idea of the characteristics of the soil.



If the soil is not suitable, the plant simply could not grow. Similarly, if the market structure and companies are totally different, a ingenuous transplantation of a opposed system may fail.

Listed Companies and orthogonal Investment

Since 1979, China has been adopting the Open Door Policy to attract foreign investment. This signals the change from a planned economy to a to a greater extent market oriented approach. When the Chinese government realised that the state-owned enterprises (SOE) were incompetent and no-match with foreign-owned enterprises (FIE), they decided to privatise these SOEs through listing. At one time, these SOEs were plane encouraged...If you want to get a full essay, order it on our website: Orderessay



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