An Analysis on Some Shortcomings in Designing Our Independent Director System

Independent director system is new to China. There exist shortcomings in the procedure of independent director election and appointment, in the aspects of its requisite qualifications and working methods, incentive mechanism and its relation to the board of supervisors. Through one-by-one analyses on the problems above, the paper points out that to set up the system does not mean that problems can be readily solved; in terms of the governance of the listed companies, the key is to realize the diversification and rationalization of company stock equity; the independent director system would be able to play its role better only if the stock equity structure were relatively natural.