Study On The Criteria For Determining The Duty Of Diligence Of Independent Directors

China introduced the independent director system in the 1990 s,and the system has to a certain extent helped the governance of listed companies.However,there are still some problems: in terms of legislation,there are only principle provisions on the directors’ duty of diligence at the level of legal provisions,and the distinction between independent directors and ordinary directors and the criteria for determining the duty of diligence are all stated;in terms of practice,the SFC and the courts also do not distinguish between the two,and there is a misunderstanding of the system in determining the duty of diligence of independent directors,and the criteria for judgment are not clear and The criteria for determining the duty of diligence of independent directors are unclear and discretionary.It is clear from the above that the determination of the duty of diligence of independent directors is an issue that needs to be addressed in practice.This article argues that the criteria for determining the duty of diligence of independent directors should first be confirmed,followed by a discussion of the criteria for determining the content of the breach of the duty of diligence.Chapter 2 of this article focuses on the criteria for determining the duty of diligence of independent directors.This paper argues that the duty of diligence has a smaller scope and can be regarded as a special duty of care,while independent directors in China are part-time and auxiliary in their work,and it is necessary to distinguish between the duty of diligence of independent directors and ordinary directors.In the light of the functions of independent directors in China and the interests of small and medium-sized investors,this article argues that the core of the duty of diligence of independent directors is the duty of supervision and the duty of strategic assistance.The clarification of the content of the duty of diligence will help to determine which acts of independent directors have violated the content of their duty.In other words,to what extent should the standard for determining a breach of diligence be set.According to the extraterritorial examination,there exist three standards in various countries,namely subjective standard,objective standard and combined subjective and objective standard,while domestic scholars are not uniform in their statements on the judgment standard.In this article,we believe that objective criteria are admissible,but different objective criteria should be set according to the different responsibilities of independent directors and their different professional backgrounds.When performing general duties,the criteria for independent directors are basically the same as those for ordinary directors,except that the requirements for attendance,reliance on company information and restrictions on access to information should be lower than those for ordinary directors.When performing special duties,the standards should be higher than those of ordinary directors: when monitoring,they should be vigilant and continuously concerned about major decisions of the company,ask questions and investigate in a timely manner,and report when necessary;when performing strategic assistance duties,they should offer professional opinions on professional issues in major matters of the company based on their professional background,and their judgement and attention to the professional part should be higher than those of ordinary directors,but slightly lower than those of non-professional directors.Independent directors shall enjoy the right of professional reliance on reports issued by their third parties,while such reliance shall be limited to a reasonable extent,for example,it shall not stop at simple consultation,and the reports must be formal and authoritative.