Study On The Independence Within The Independent Directors' Legal Status

Modern enterprise system requests the company having a good corporate governance structure to reasonably separate the powers of policy-making, execution and supervision. The board under unified corporate system is granted the powers of both policy-making and supervision, but it was once utilizable but not suitable today because frequent and complex commercial activities impel the managers with high quality surpassing members of the board to seek for eascaping the supervision. In the hope of changing this situation but being not willing to fundamentally change the company structure, the independent director was bring into being. Bankruptcy of the bigs during the periond of financial crisis urged on more dependence of independent directors, and, furthermore, how many independent directors and in which posts are being one of the important standard appraising the quality of corporate governance.Although the function of the independent director can effectively fill the blank of supervision, it is not a perfect system with difficulties in defining and consistently keeping with independence. Although he or she is required of non-relative and non-executive, the independent director is still the member of the board so that he or she shall be faithful to perform the duties of a director who is not that far away from the company. It is to be called the dilemma of independence, and the environment of society may make independent directors more difficult to be independence, for the pursuit of private interests as a fundamental feature of human nature being driving them to act inconformable with the interest of who he or she ought to be on behalf.As to China, it is significantly important to create development conditions for the system of the independent director. It is a distortion when defining the independent dircotor as opponent of major shareholders and supporting the minor, for the role is to be on behalf of shareholders as a whole but not part of them. The role acts as one mechanism of forming a balance in the company rather than triggering new contradictions. Besides, competent authorities urge listed companies on appointment of independent directors, but they consist on widspread administratively supervise as before, leaving little necessity of the supervision from independent directors. Plus, without no appropriate legal guarantee for independence, it is hard to keep the system to play a utility.