considered in some important decisions. it was especially emphasized that stakeholders should be involved in the insolvency process. fourth, the stakeholders should have access to necessary information on managing the company. the oecd again revised the five principles in 2004. in this revision, the protection of stakeholders and whistle blowers is emphasized. it, to a larger extent, stresses the rights of employees and creditors. there are three main aspects. first, 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 in the company. 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. second, corporate governance shall ensure the enhanced participation of employees, so that the employees ’ special skills can be put to use in the company, benefiting the company directly or indirectly. the examples of employees ’ participation include increasing representatives of employees in the board, adopting the plan of employee stocks holding 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. third, 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 further stressed in the new version. china wishes to learn from international experiences and practices in the process of building a socialist market economy with chinese characteristics. it can be said from the point of view of a socialist market economy, china should do better in terms of employees ’ status and their involvement in managing companies. however, we do not have any established principles or framework related to stakeholders. we will learn by doing and reviewing experiences. why have we not done better compared with many traditional western economies in this aspect? it has to do with the mistakes in the past. for any country learning from the history and past experiences is a very important, though not an easy task, and one that is liable to misunderstanding. an example at hand is the americans ’ review of the great recession in 1929. the reviews generated different conclusions right after the recession and in the 30 ’ s and 40 ’ s

the existing legal framework, and hence the credit reporting agencies can not collect and disclose information according to laws and the interests of the enterprises and individuals can hardly be safeguarded, which has hindered the healthy development of credit reporting industry. failure of the financial institutions to timely detects irregularities in financial transactions such as duplicate frauds, repetitive mortgage with the same assets and connected guarantee, etc. may cause great asset loss. second, the underdeveloped enterprise insolvency law makes it difficult for financial institutions to protect their assets. the protection of financial institution creditors under the enterprise insolvency legal framework has a direct impact on the safety of the financial institutions ’ assets. the existing laws governing enterprise insolvency mainly include the provisional enterprise insolvency law applied to the state - owned enterprises, chapter xix ( debt repayment procedures for the insolvency of corporate legal entities ) in the civil procedure law applied to other enterprises, and a series of judicial explanations promulgated by the supreme people ’ s court. however, these laws have not adequately protected the rights of creditors. in terms of the building of insolvency legal system, the bankruptcy administrator system commonly adopted as an international practice has not been established in china, and the current bankruptcy liquidation system often ignores the interests of creditors in liquidation. in terms of the bankruptcy procedures, relevant rules on the administration and acceptance of the insolvency cases, creditors ’ meeting, and supervision system are not complete in the existing legal system, which further weakens the protection of creditors ’ rights by the law. as the last resort to protect the claims of financial institutions, if the insolvency law fails to fully protect the interests of the creditors, non - performing loans and credit risks will probably accumulate in financial institutions. currently, legislation of the new enterprise insolvency law has entered a critical stage. compared with the existing law, the new one ( the second draft ) on the one hand extends its application by including all the corporate legal entities under its umbrella, and enriches the provisions on insolvency procedures on the other hand by improving the protection of creditors ’ rights in every aspect. however, defects remain in the draft law concerning the determination of repayment priority of claims and criteria of insolvency, two focal points that are closely related to the protection of creditors ’ rights. regarding repayment priority of claims, priority is given to employee entitlements over secured debts.