Research on the Independent Director Legal System

Author: Xie Chaobin
Publisher:
Publish Date: 2004-08-01
Features: The introduction and transplantation of the independent director system in China can draw on advanced experiences in corporate governance from Western countries. However, it is essential to connect with China's actual conditions and address a series of issues in the localization process of the independent director system, especially in coordinating its relationship with the supervisory board. Whether the two can be organically coordinated will determine the success of transplanting the independent director system in China. Within the modern corporate board of directors, independent directors play a supervisory and balancing role that other internal directors do not have, and they contribute significantly as decision advisors and strategic consultants to the company with their broad perspectives and strategic vision. As an innovative system, the basic value of the independent director system is primarily reflected in: first, forming an effective counterbalance mechanism in the corporate governance structure to prevent and curb the "loss of control by insiders"; second, improving the quality structure of the board of directors and enhancing the scientific decision-making level of the board; third, strengthening corporate public information disclosure to ensure that financial and business disclosures are more fair and transparent; and fourth, addressing the shortcomings of traditional corporate governance structures under the civil law system and the common law system.