The Theory Of The Independent Director's Duty Of Care

Independent directors’ duty of care is that independent directors should meet the obligations according to laws,administrative regulations and constitution when they are in the exercise of the powers.Independent directors’ duty of care is associated with duty of loyalty,but they both are different from basis, the essence and requirement of obligations and whether to apply to the business judgment rules.Besides,the independent directors’duty of care is also different from the executive director’s duty of care such as basic theories,system function,duty natures because of its characteristics.According to the properties of the functions of independent directors,independent directors’duty of care is divided into supervisory obligations and strategies involved obligations.On one hand,according to whether to independent director professional judgment,supervisory duties can be divided into entity supervision and procedural supervision.Independent director mainly perform their duties through attending the meeting of board of directors.Entity supervision requires independent directors propose substantial objection to the resolutions of the meeting of board of directors,which break laws and constitution.Procedural supervision just requires their corresponding program behavior,such as attending a meeting of the board of directors,answering the shareholders’ inquiries,giving a report on work and so on.On the other hand, strategies involved obligations includes all the liabilities in corporate strategic management decision.Comparing to supervisory obligations,strategies involved obligations are not the most important,which are just for making supervisory duties better.So far,the independent directors perform duty of care should mainly follow three standards:the subjective standard,objective standard and combined standard.According to combined standard,the subjective standard is the lowest standard,which require independent directors have certain professional knowledge and skills as other normal independent directors.The subjective standard apply to independent directors with high level personal abilities.The combined standard makes up each own defects.The company can be free to choose alternative requirement between the liability for breach of contract and tort liability according to the theory of request rights concurrence when independent directors’breach of the duty of care.We should not only make responsibility clear, but also to give adequate protection to attract more excellent talents to actively participate in the company management mainly through the general meeting of shareholders,board of directors,the articles of association of the company, the business judgment rule,limitation and responsibility insurance,drawing lessons from developed country experience.At present,there are many problems in the independent directors’ duty of care system itself.Law about independent directors duty of care lack of system in our country,and there is no standard being used to judge duty of care,even so no perfect protections for independent directors.Of course,there are also some problems in practice.Independent directors with less rights haven’t right location and pay not adequate time to get incomplete or wrong informations.We can perfect the independent director’s duty of care system by following methods. At first,we must perfect independent directors’ duty of care legislation system to form scientifical legislation system with main laws and supplemented regulations.Secondly,the "company law"should expressly provide the combined standard of subjective and objective standard for performing the independent director’s duty of care.Thirdly, the judicial interpretation of the Supreme Court absorb in the business judgment rule carefully,and perfect it in the practice.Finally,the independent director liability insurance system and related incentive mechanism are important ways to perfect the independent director system.