LISTED companies in China are preparing for an unprecedented wave of resignations by independent directors following a Party directive on officials’ other jobs outside their office.

    So far, more than 200 listed companies have reported resignations by their independent directors, some of whom are ex-government officials, others university professors and administrators.

    As part of an anti-corruption campaign, the Organization Department of Communist Party of China (CPC) Central Committee issued a circular in October, banning incumbents and college personnel from assuming posts outside their office.

    The circular also stipulated that only those retired from their government role for more than three years are allowed to take up jobs at companies under relevant authorities’ approval.

    As a result, when listed companies convene board meetings, one of the issues they have to resolve is the resignation of board members whose directorships violate the circular’s mandate.

    “Officials have strong political connections and hiring people with such background as directors raises questions over ethical practices and breeds collusion between business and government,” said Zhang Huiming, a professor with School of Economics at Fudan University.

    Public disclosures of listed companies over the past month have shown that a number of former high-ranking government officials have given up board seats. Disclosures from China’s listed firms’ 2012 financial reports showed more than 640 independent directors were ex-officials.

    An ex-official-turned independent director who recently resigned from a listed Chinese bank was making 364,000 yuan (US$58,442.02) a year, the bank’s 2013 financial report showed. The CPC said in the circular that no ex-officials should be paid for their work at companies.

    The rank of these officials goes as high as ministerial level. Some have even served as director of more than one listed company. Their role in these companies has often been questioned. (Xinhua)