The Way Forward for the System of Independent Directors of Chinese Companies from the Perspective of Comparative Law

Abstract

The independent director system is an effective corporate governance system under the unit corporate governance model. This system originated in the United States. Due to the high separation of corporate ownership and control, the problem of “insider control” will harm the interests of shareholders. And this system just enables independent directors to play a role of supervision and checks and balances on the company’s board of directors. After China introduced the independent director system at the beginning of the 21st century, due to the different economic and political backgrounds, capital market development, and corporate governance model of the United States, some problems will inevitably arise in the operation of this system in China. The “astronomical price” compensation borne by the company’s independent directors in the financial fraud case of Kangmei Pharmaceutical Co., Ltd., and the introduction of a certain degree of independent director resignation after the case, analyze the current status of the independent director system in China. Comparing the system differences between China and the United States points out the problems and reasons for China’s independent director system, and puts forward relevant suggestions for improving China's system based on the actual situation.