4 ) all the barriers impeding cross - border voting shall be removed. third, more emphasis is put on the resolution of interest conflicts. based on the 1999 version that stresses disclosure of interest conflicts, the 2004 version requires the interest parties involved to disclose the way of resolving interest conflicts. in addition, it also takes note of the conflict of interests existing between the big and small shareholders in the emerging markets. it ( 1 ) adds a new principle that requires rating and research agencies to reasonably handle conflicts of interest when disclosing information about the company ; ( 2 ) clarifies auditing responsibility by stating that the auditors shall be responsible to the board ; ( 3 ) strengthens the independence of auditing and defines the steps that should be taken by the auditors to manage and alleviate potential interest conflicts ; and ( 4 ) pays more attention to the protection of small shareholders ’ interests and states that “ the interests of small shareholders shall be protected and they shall be effectively compensated for any direct or indirect impairment caused by the controlling shareholders ”. fourth, it puts more emphasis on the protection of stakeholders and whistle blowers. it, to a larger extent, stresses the rights and role of employees and creditors. ( 1 ) it clearly states to establish a mechanism that “ enhances the participation of employees ”. stakeholders, including individual employees and their representatives, shall be able to freely express their views to the board with respect to any illegal or immoral activities. employees ’ views and their rights to express the views shall be respected and protected. it shall be ensured that information can flow safely and confidentially to the board. ( 2 ) corporate governance shall ensure the enhanced participation of employees, through which the information of employees ’ special skills can flow to the management, benefiting the company directly or indirectly. the examples of employees ’ participation include increasing representatives of employees in the board, adopting the plan of employees holding of stocks and establishing a profit sharing mechanism such as pension contribution. for instance, pension contributions can be pooled into an independent fund and the fund manager shall be independent from the company ’ s management in terms of business operation. ( 3 ) it stresses the important role of creditors in corporate governance and external supervision. it also states that effective and efficient liquidation framework and credit rights enforcement mechanism are important supplement to effective corporate governance, ensuring effective protection for the rights of the shareholders. the importance of employees and creditors is raised in the new version. fifth, it further stresses the responsibility of the board. ( 1

management were not qualified, then through replacement of the management team would there be a fundamental turn for the better in terms of operation of the banks? on the basis of better operation and with profit accumulation for some time, would reform of corporate system and share - holding arrangement improve the bank performance? experience for many years indicates that the effect was not optimistic as with the reform of state - owned enterprises by following the above perception. to trace the problem to its source, we find that the problem of state - owned entities lies not only in weak management but also in the more fundamental problem of corporate system. hence, the 16th congress of the cpc and its third plenary session both emphasized once again the direction of the reform of state - owned enterprises. comparing state - owned banks with state - owned enterprises, it will be easy to find out the high similarity between them. if in the past state - owned enterprises acted like government organizations or featuring “ quasi - bureaucratic system ” to some extent, then state - owned commercial banks are more like government organizations instead of commercial entities. state - owned commercial banks have instituted apparent administrative hierarchy and officialdom in terms of personnel system, remuneration system, staff benefits, social security and internal incentives system. decision - making power of the persons in charge of state - owned commercial banks is more than often limited, and lacks market - oriented incentives. although there is big difference in the responsibility assigned to a bank clerk for savings counter and to a credit officer with high ability of risk control, there is no big difference in terms of remuneration. with inadequate internal incentives and deficient outside pressure, reform of state - owned commercial banks might long protract if solely emphasizing on the improvement of management. documents of the 16th congress of the cpc have clearly stated the direction of share - holding reform. efforts shall be made to change the operation mechanism of enterprises in real earnest through changes in the structure of corporate governance. this idea should also fit in with the reform of stateowned commercial banks. the reform of state - owned commercial banks is also reform of state - owned enterprises in its very nature. ( ii ) whether or not to actively push state - owned commercial banks to be public listed companies? one opinion mistakes listing in the stock market as the ultimate target of the reform. some people believe that going public is aimed at financing for capital infusion of banks and for internal incentives of the management team. it is certain that the purpose of listing of state - owned commercial banks