How Do I Choose the Best Corporate Governance Framework?

The so-called corporate governance structure refers to a set of institutional arrangements for the owner (shareholder) to supervise, motivate, control and coordinate the company's business management and performance improvement in order to achieve the effectiveness of resource allocation. The relationship between the parties involved in performance. A typical corporate governance structure is a certain mutual relationship framework formed by the owner, the board of directors and the executive manager. According to international practice, a larger company's internal governance structure usually consists of a shareholders' meeting, a board of directors, a manager, and a board of supervisors. They divide each other's rights, responsibilities, and interests, and check and balance each other in accordance with the rights, responsibilities, and interests granted by law. ^[1]

Corporate governance structure

The so-called corporate governance structure means that in order to achieve the effectiveness of resource allocation, the owner (

The corporate governance structure refers to the structural institutional arrangement in which the ownership and operating rights of a company form a mutual check-and-balance relationship based on trust responsibilities in order to achieve the company's best operating performance.

The shareholders (large) meeting is composed of all shareholders and is the highest authority and the highest decision-making body of the company.

Internal organization of the company

The corporate governance structure should address three basic issues that affect the success or failure of a company.

The first is how to ensure the return on investment of investors (shareholders), that is, to coordinate the interests of shareholders and enterprises. in

West

In May 1999, a group of 29 developed countries

Corporate governance structure

The so-called investor is the person who invests capital in the enterprise, that is, the owner of the enterprise capital, that is, the shareholder. Once any person's property (capital) is invested in the enterprise, it becomes the legal person's property of the enterprise, and the investor enjoys the rights of the investor. These rights mainly include asset benefits, participation in major decision-making of the enterprise in accordance with legal procedures, employment of operators, and transfer of equity. In a market economy, the assets of a state-owned enterprise must have a clear representative of the investor, just like other assets. At the same time, state-owned assets should also have the property rights elements of general assets: ownership, management rights, income rights, and disposal rights.

To improve the state-owned asset investor system, it must be further clarified that the SASAC is not the government's administrative agency, nor is the relationship with the enterprises under its jurisdiction, nor is it a subordinate relationship. The relationship between legal persons, the relationship between principals and agents. As the investor's representative, the SASAC must not only exercise the rights of shareholders in accordance with the law, but also ensure that it does not go offside or overpower, and enjoys the right to income, major decision-making rights and operator selection rights over its state-owned assets. Otherwise, if the affiliated administrative intervention continues, the phenomenon of "boss and mother-in-law" will intensify, and the enterprise will be put to death and returned to the original point of reform. Not only that, because the SASAC has more power than the government departments in the past, the problem may become more complicated. If the decision is wrong, the losses will be more serious.

To improve the investor system, it is also necessary to establish corresponding liability mechanisms. The SASAC must report to the National People's Congress on the operation of state-owned assets and the implementation of the state-owned capital operating budget. People's congresses at all levels must set up special auditing and monitoring institutions to evaluate, inspect and supervise the operating performance of state-owned capital. At the same time, a system of accountability should be established to blame the parties for any losses in state-owned capital operations caused by mistakes in decision-making.

Corporate governance structure participates in governance

Although the theory of stakeholder corporate governance is not perfect, and the ways in which stakeholders participate in corporate governance are also being explored in practice, stakeholder governance has gradually become a trend in the development of corporate governance in various countries. In the practice of corporate governance in China, incidents involving stakeholders including small and medium shareholders, creditors, employees, etc. occur from time to time. Therefore, exploring the mechanism and feasible ways for stakeholders to participate in corporate governance has become China's perfect company The urgent task of governance.

Continuing to advance the reform of the property rights system and establish a reasonable corporate equity structure is a basis for establishing a company's internal check and balance mechanism and effective supervision mechanism. China's listed companies generally have "one share" status. Controlling shareholders can easily use their controlling position to embezzle the funds of listed companies, which seriously affects the operations of listed companies and directly harms the interests of listed companies and investors. It is necessary to actively promote the diversification of equity and change the status of the "one-dominated company" of listed companies. However, international experience has shown that excessive dispersion of equity can also lead to problems such as insider control. Therefore, the reform of China's corporate property rights must proceed from the actual situation in China, fully take into account the actual state of property rights accumulated over many years in China's state-owned enterprises, especially large enterprises, and promote and promote mutual ownership between state-owned enterprises and between state-owned and non-state-owned enterprises On this basis, diversification, decentralization, and legalization of equity will be realized.

External governance of corporate governance structure

These institutions are typically banks in Japan and Germany, while in the United States they are mainly institutional investors, such as pension funds. China's institutional investors have also made great progress. However, the overall scale is insufficient and the type is single. It still belongs to the "silent majority" in participating in corporate governance and has not given its due voice in the cause of corporate governance improvement. In the Chinese stock market, institutional investors are just a "vote with a foot" trader rather than a corporate governance-oriented investor. Therefore, to create a dynamic mechanism for institutional investors to participate in corporate governance and explore effective ways to participate in corporate governance, and to play the role of institutional investors in corporate governance, is an important task facing China to improve corporate governance structure.

Corporate governance structure establishment system

Effective corporate governance requires a good system and external environment. From the experience of developed countries, to achieve the goals of corporate governance requires a competitive product and capital market, an active market for corporate control, and incentive and supervision mechanisms for managers. Not only a sound "Company Law", There is also a need for strict auditing and financial disclosure systems, strict anti-fraud regulations, and efficient and high-level judicial systems, administrative regulators, and self-regulatory organizations. China's capital market has not been developed for a long time, and the corresponding legal system is relatively backward. Administrative and regulatory agencies and intermediary organizations have insufficient credibility, and the judicial system is not efficient. All of these must be improved and constructed from a systematic perspective to create good external conditions for establishing an effective corporate governance structure.