On Legal Issues Several Independent Director System

The independent director originated in the United States. In order to prevent theboard of directors to abuse power and the managers to control the companiesinternally because of adopting a single system of corporate governance modes (that isin addition to the board of shareholders and board of directors as the only companyexecutive institutions, there aren’t any other board of supervisors in thecompanies.).The United States set up the independent directors external in the boardof directors. In2001the Securities Regulatory Commission of China introduced thissystem in the listing corporations formally. But due to the short period of time ofintroduction, relatively rough of the law, lack of relevant system and other reasons,the system of independent directors doesn’t play its real role in our country well, evenexist some disadvantages. The law Directive opinion of independent director systemin the listed Corporation is the basic law of the independent director system inChina.This article will describe the system from three aspects. First, research theindependence of the independent director system. Independence is the soul of theindependent directors system. Its’ independence includes the independence of legalpersonality and legal acts. The independence of the independent director means bothindividual independence and group independence. To guarantee the independence ofindependent directors, we must work from the qualifications, appointment andremoval procedures, salary system and so on. Second, research the relationshipbetween independent director system and the board of supervisors system, namely,that is their conflict, coexist and supplement. China use the mode of importing theindependent director system while existing a special supervision organization. Finallyit cause the problem of two analogical systems exist in a legal system. So how tosolve this problem and find a way to make them work consistently is the focus of thischapter what to discuss. Third, research the responsibilities of the independentdirector system. Whether the independent directors should undertake the liability hasbeen an academic controversy. I think the independent directors should bear theresponsibility, but it must be distinguish from the general director of the company,that is the legal responsibilities of the independent directors need to limit more. Thislimitation can be carried out from the aspects of its responsibility form, object, theprinciple of imputation, limiting method and establishing and perfecting independentdirector liability insurance system. In short, introducing of the independent directorsystem to our country is helpful to improve the corporate governance structure. But the development of independent director system itself and perfection must be inaccordance with the practice of corporate governance in our country and let theindependent director system play its due function of supervision in China. The authorselected three of the most controversial and representative problems in theindependent director system, explain problems of independent director system inChina’s listing Corporation in the practice and solve these problems after referring tolarge number of books and articles about independent director system.