China will introduce regulations requiring its 1,100 companies that have A shares on the Shanghai and Shenzhen stock markets to appoint independent directors, according to Laura Cha Shih May-lung, vice-chairman of the China Securities Regulatory Commission (CSRC). In her first public speech since taking office a month ago, Mrs Cha told the World Economic Forum that this was one of many measures the government was taking to improve corporate governance of listed firms and protect the interests of shareholders. 'There is insufficient understanding among the boards of the listed companies of the interests of minority shareholders and a lack of accountability towards them,' she said. As of the end of last year, the 1,100 companies had a market capitalisation of five trillion yuan (about HK$4.68 trillion) and daily turnover of 25 billion yuan from 60 million stock account holders, ranking third in turnover in Asia, after Tokyo and Hong Kong. Of the shares, 54 per cent are held by the state and are non-tradeable. 'We must raise the standard of corporate governance, which is not well developed in China,' Mrs Cha said. 'This includes shareholder rights, their right to clear and timely information and the management being held responsible and accountable. We have a lot to do. 'Corporate governance will be one of the major areas of our work this year. We will require listed companies to have independent directors. There will be great demand for such qualified directors. We must be vigilant and robust in enforcement. We must have the appropriate legal framework and an independent judiciary.' Mrs Cha disappointed her audience by declining to answer questions on subjects outside the content of her remarks, saying that she was too new in her job. One member of the audience asked if it was fair to domestic investors that the same company could have H shares in Hong Kong that trade at 10 to 12 times earnings and issue A shares in the domestic market that trade at 50 to 60 times earnings. She declined to comment on when or if China would open a secondary board. The CSRC is said to have put this on hold at least for this year because it believes the existing markets are speculative enough and a second board would be even more so. A native of Shanghai, Mrs Cha moved to Hong Kong when she was two. Educated as a lawyer in the United States, she joined the Hong Kong Securities and Futures Commission in 1993 and became deputy chairman in 1998, the post she held before she moved to the CSRC. She had to give up her US passport as a condition for the new job. She has a two-year contract from mid-March with an annual salary of HK$5.5 million to HK$6 million, according to the Chinese media. That is said to be about 20 times that of her boss, Zhou Xiaochuan. Brokers said Premier Zhu Rongji insisted Mrs Cha be paid an internationally competitive salary as part of a process of hiring Chinese experts from overseas to key posts in the government, despite the glaring inequality with those already in the bureaucracy.