Research On The Civil Liability Of Independent Directors In Securities Misrepresentation

The civil liability of independent directors in securities misrepresentation refers to the civil legal consequences that independent directors should bear when the listed company where they work has misrepresentation,which is tortious civil liability.The Several Provisions of the Supreme People’s Court on the Trial of Civil Compensation Cases for Infringement of Misrepresentation in the Securities Market（hereinafter referred to as the Provisions on Compensation for Infringement of Misrepresentation）,which came into effect on 22 January 2022,is a review of the Provisions of the Supreme People’s Court on the Trial of Civil Compensation Cases Arising from Misrepresentation in the Securities Market（hereinafter referred to as the Provisions on Civil Compensation for Misrepresentation）implemented on 1 February 2003 by the Supreme People’s Court in order to severely crack down on misrepresentation in the securities market made modifications and improvements.The Provisions on Compensation for Infringement of Misrepresentation further points out that in the case of Securities Misrepresentation,the liability payable by independent directors should be comprehensively judged according to the degree of fault of independent directors in the company’s misrepresentation,that is,whether independent directors perform their duty of diligence.In the past,the pursuit of the responsibility of independent directors in China was mainly administrative punishment,and the court’s adjudication view on the duty of diligence of directors has undergone a process of gradual supplementation,clarity and perfection.However,in recent years,independent directors have borne more and more civil compensation liabilities in misrepresentation cases,and there are still difficulties in the determination of the diligence of independent directors in judicial practice,and at the same time,the judgment of independent directors on huge civil compensation has also aroused heated discussion from all walks of life.The Provisions on Compensation for Infringement of Misrepresentation（2022）distinguish the fault determination of independent directors from those of non-independent directors,clarifying the two situations of intent and gross negligence,and excluding general negligence and minor negligence,and separately stipulating the defense of independent directors’ innocence.However,The Provisions on Compensation for Infringement of Misrepresentation（2022）have not yet responded to the form of independent director liability or provided innovative solutions,and the controversy over the proportional joint and several liability rule will continue.There are still questions about how the civil liability system for independent directors in securities misrepresentation cases should be operated in subsequent judicial practice.There are multiple reasons that plague the operation of the system,and under the current system,the dislocation of the functional objectives of independent directors is undoubtedly an important factor.The fully internalized functional orientation of independent directors prevents them from performing an effective external oversight function.The control of the company actually exists in the listed company,the exercise of the right of control is for the purpose of the company’s interests,the company’s interests can be further divided into the company’s public interests and the private interests of the controller,and the private interests of the controller need the intervention of external supervision mechanisms.Independent directors should have the functions of supervision,questioning and suggestion,take the specific matters that the supervisory controller may grab private interests as the scope of their duties,reconstruct the performance method based on rectification suggestions,and at the same time grasp the initiative of the right to know,and clarify the reasonable standard of trust in the expert opinions.The civil liability forms of independent directors in securities misrepresentation should be distinguished in different types,and joint and several liability should be borne in the case of common intent,and proportional liability should be borne in the case of gross negligence;the scope of liability can refer to the two modes of prior limitation protection of the signing of the liability limitation contract and the ex post facto restriction protection of the resolution of the shareholders’ general meeting.