Research On Liability For Independent Director 's Damage

Ever since the issue of “Guiding Opinions on Establishing the IndependentDirector System in the Listing Corporations” by the China Securities RegulatoryCommission in2001, it has been ten years since officially building of the independentdirector system in Chinese listing companies. The purpose of introducing this systemis to regulate the operations and improve the governance of the listing companies, butdue to all different kinds of objective factors, the performance of the independentdirector system is not that desirable so far, and the problems showed in the practiceprocess is not to be overlooked. The existence and implementation of the law systemis based on the organic unity of responsibility, power and interest. Independentdirectors must bear legal responsibility for their breach of duty or abuse of powerwhile they exercise their power of issuing independent opinion or perform theobligations of faithfulness, attention, etc. Although the China Securities RegulatoryCommission did have provided some relevant regulations when introducing theindependent director system, there is no specific provisions about its lawresponsibilities, and no distinction on its property,range with that of the internaldirector board.There are some provisions about the obligations and responsibilities ofdirectors in the new “company law” the2005edition, and the “security law”alsomade several relevant provisions on the corporation directors`responsibility related tothe security issuing and transacting, but the two laws do not have detailed provisionson weather the independent director board should take the same responsibility as thegeneral director and the specific factors that should be taken into consideration whenidentifying the liability of the independent director board. The independent directorboard`s legal responsibility is made up with civil liability, criminal liability andadministrative liability, while currently, in the China`s judicial practice, in most cases,the offender will be investigated its administrative liability, and those investigate itscivil liability, criminal liability is a common phaenomenon. Because the provisionsabout the independent director board`s civil responsibility are not perfect, and thereremain much blankness, there is no detailed specific operation rules to regulate the corresponding independent director board`s compensation liability, and the researchin the academic field also lack of intensity. When the misconduct of the independentdirect cause some loss to the corporation and the third party, investigating its civilresponsibility is definitely the most effective compensation to the corporation and thethird party, and it can make up its loss to a great extent. Under such background,studying the independent director board`s damage compensation is very essential.The independent director`s damage compensation means the tort compensatoryresponsibility due to the misconduct of the independent director board. As anindependent member of the director board, its legal status is different from theinternal director board, so the reasonable margin of the damage compensation is alsodifferent from that of the internal director board, this paper starts from the rights andobligations of the independent director board, states the legal basis of the independentdirector`s damage compensation. And then discusses on the components of theindependent director`s damage compensation, including main body component,subjective component, behavior component and results component etc, thus toanalysis the different responsibility between independent director board and internaldirector board, by investigating the relevant law-establishing and practice situation ofthe independent director board`s damage compensation in foreign countries, andapplying it to the situation in China, it proposes the limited responsibility of theindependent director board and risk separation while asking them to work withdiligence and integrity, in order to improve the independent director board`s damagecompensation system in China.