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Independent board directors required
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CHINA'S stock market regulator is drafting a set of rules to require that listed companies hire independent board members to protect the interests of investors, State media reported on Wednesday.
The China Securities Regulatory Commission (CSRC) is aiming to have companies fill one-third of their boards with independent members, preferably recruited from the ranks of industry experts and scholars, the Xinhua News Agency said.
The move is expected to improve corporate governance, said Gao Xiqing, vice chairman of CSRC.
“The current system, which is run by a board of supervisors, usually big shareholders, wasn't working," Xinhua quoted Dong Fureng, a renowned economist, as saying.
Insider control has hampered the interests of small and medium-sized investors, whereas independent board members will have no personal interest in the company, Xinhua said.
The rules will be first applied to fund management companies and later extended to listed firms and securities companies, said Gao. He did not give any specific dates.
A set of guidelines on how independent directors should conduct themselves is also being drafted by the commission, according to Gao.
Other aspects concerning corporate governance, such as information disclosure, will also be addressed to improve accountability, he said.
A study conducted by the Shanghai Stock Exchange over the past three years found only eight independent directors among the approximately 3,000 board members surveyed, Xinhua said.(SD-Agencies)
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