On The Independent Director System

The corporate governance structure is a problem of law, and one of economics aswell. Along with the development and perfection of China's socialist market economy,and with the continuing deepening of the state-owned enterprises reform and the opendegree, China tries to meet the international demand as to this problem. Someinstitutions that would do good to better the corporate governance have beenintroduced, and they did show effectiveness in the aspects of bettering Chineseenterprises' interior administrating system. The independent director institution is justamong them. The dissertation tries to focus on the legal status of the independent directorinstitution. With the use of study methods such as the science of comparative law,history and so on, it discusses the basic facts on independent director institution,mainly concerning the obligation of the independent directors, the character of thecivil liabilities of independent directors' undertaking and the undertaking andelimination of the liabilities. On the basis of taking successful foreign legislation forreference, the dissertation gives some humble opinions. It tries to make some theorycontribution to the problem of independent director institution, to help better thetheory construction. There are five parts in the dissertation. The first chapter introduces some facts on the independent director institution.The origin and development of it are given, and then some discussions on China'sintroducing into it, mainly on relationship between the independent director and thedirectorate & board of supervisors and how to harmonize their functions. Theindependency of the independent director and the scope of the main bodies that wouldtake directorial liabilities are specified at last. The second chapter probes into the rights and obligations of the independentdirectors. It is its legal status that entitles the independent directors to enjoy somerights and bear certain liabilities correspondingly. This dissertation introduces sometheories on the directors' responsibility in developed countries, and also tells of thedifference that lies between the liabilities of independent directors and common ones.The chapter is the opinion that both bear the duty of loyalty, while the standard tomeasure it should be comparatively lower to the former. The third chapter analyses the quality of the civil liabilities of independentdirectors, the circumstances and the forms to independent directors to assume civilliabilities, and also puts forward the opinion that the independent director should bearthe social ethic responsibility. It probes into the quality and circumstances of theliabilities of the independent directors to the corporation and to the third partyrespectively, and thinks that since there lie differences in the independent directors'taking part in the directorate and enjoying rights with common directors, thecognizance of their liabilities should be based on the three composing importantdocuments to the common civil liabilities strictly. The fourth chapter discusses the limitation and elimination of directorial liability.It analyses from the aspects of the guideline on the management & judgment, and theJapanese rules on limitation and elimination of directorial liability, and suggestsChina to perfect its own legislation on this problem. The last chapter probes into the institutional environment to perfect theindependent director institution, and advices to set up insurance against theindependent director liability, and to form independent director office so that to offerguarantees to them to bring due functions into play.