Civil Liability Of Independent Directors In Securities Misrepresentation

The independent director system of listed companies is an important system borrowed from the western capital market in China,which is conducive to standardizing the governance structure of listed companies and safeguarding the legitimate interests of small and medium-sized investors.The independence of independent director is not only the initial point of departure of system design and construction,but also the foundation of the independent director system.Independent directors,as supervisors of listed companies,have the obligation to monitor and review the information disclosure of the company.However,since the introduction of independent directors,the function and role of independent directors in China has been limited.Taking the Kangmei Pharmaceutical case as an example,the five independent directors in the case were judged by the court of first instance to bear huge compensation.The huge difference between the huge compensation and the remuneration of independent directors has aroused heated discussion on the rationality,identification standards and liability limits of their civil liability.In response to the dispute,the Several Provisions of the Supreme People’s Court on the Trial of Civil Compensation Cases for Misrepresentation in the Securities Market(hereinafter referred to as the "Judicial Interpretation on Misrepresentation")was promulgated on January 22,2022,Although the introduction of the interpretation provides guidance for the solution of the above-mentioned problems,such as the nature of liability,form,fault identification and other basic theoretical issues still need to be clarified.In view of the present situation of the independent director system in misrepresentation cases in China,the author puts forward some suggestions in order to help the independent director’s civil liability.Firstly,in the legislative level,the directors should be stipulated separately in the form of a separate law to distinguish them from ordinary directors.Secondly,we should refine the standards of independent directors’ diligence from the scope of duties and the way of performing duties.Thirdly,from two aspects of duty of care and duty of loyalty,the author consummates the standard of civil liability of independent directors.Finally,the independent director liability insurance system as an important system to reduce the risk of independent directors,can reduce the amount of civil compensation for independent directors,at the same time,their own enthusiasm will not be affected too much.Therefore,it is necessary to introduce and perfect the insurance system.