On The Independence Of The Independent Directors And Its Legal Regulation

In some extent, whether the independence of independent director can be guaranteed is crucial to realize the functions of independent director. In our country, the system of independent director is far from the goals which people are expected of. Although there are different aspects of reasons for that if we look into this issue, one of the most important reasons is that the independence of independent director can't be protected.The independent director system would perform practically no function unless its independence is ensured. Therefore, the author tries to study and argue the issues of its independence and legal regulations so that to improve the development and perfection of this system.This Paper consists of four parts:Part One The independence of independent director and legal definition. The foundation of improving the concept of independent director and perfecting independent director system is to understand the content of independence correctly. Theoretical explanation and legal definition differ in different countries, but after integrated analysis, we could conclude that the independence includes four aspects: independent personality, which emphasized that independent director shouldn't be controlled by other people in the company and execute independent judgment over company operation and exert authority; independent economic benefits, which is the material basis of independent personality; independent business, e.g. business operation or post situation should not be relevant to company's operation, which is the necessary pre-condition for independent director to realize its independent function; independent motion mechanism, which is the guarantee for exerting independent director function.Part Two Analyses on Appointment and Remove System of Independent Director. The guarantee of independence is one of the basic goals in many countries' legal regulations. Appointment and Removal System of Independent Director includesregulations on negative qualification, selection, term and replacement. This paper analyzes and argues the above aspects and indicates to improve the appointment and removal system of independent director is not only necessary to ensure independent director would be qualified for their post, but also necessary to guarantee its independence.Part Three Analyses on authorities of independent director and exertion. The independence of independent director and its basic function must be shoed through exertion of authorities of board of independent director. Therefore, what kind of authority the independent director enjoys is crucial for independent director to exert its authority and ensure its independence. This Paper narrates the general appointment, special appointment and its exertion and guarantee.Part Four Obligations of Independent Director. This Paper explains the attention obligation, loyalty obligation, special obligation of independent director in details in order to make clear that the emphasis on the independence of independent director doesn't mean actions by independent director won't be binding by anything. Its obligation and liability are stipulated clearly by law at the same time to insure independent director to exert its authority legally and to embody its independent position correctly.To realize the independence of independent director, a full scale legal system need to be built up while improvement on select and appoint system, regulations of authority, and guarantee mechanism are the three important basic points.