Author(s)

Liu Shenghao ¹, Long Jiangling ²

Affiliation(s)

¹ College of Law, Taiyuan University of Science and Technology, Taiyuan, Shanxi, 030000, China
² Qixingguan District People's Court, Bijie City, Guizhou, 551799, China

Corresponding Author

Liu Shenghao

ABSTRACT

The second amendment to the Company Law involves several aspects of the independent director system. The existing corporate legal framework and judicial practices are currently inadequate for the evolving corporate governance model under board centralism. Consequently, the liability system for independent directors requires urgent improvement. This paper explores the theory of board centralism and the roles of independent directors, integrating these concepts with the construction of relevant systems beyond regional boundaries. In line with the responsibility of independent directors to oversee and safeguard the interests of minority shareholders, this paper advocates for clear legislative definition of the duty of diligence. It proposes revisions to judicial accountability and restructuring of the independent director liability system through enhancements to their incentive mechanisms, thereby aligning it with the development of a board centralism system tailored to the market economy of China with its unique characteristics.

KEYWORDS

Board centralism; duty of diligence; directors' liability; insurance business judgment rules

CITE THIS PAPER

Liu Shenghao, Long Jiangling, Reconstruction of the Independent Director Responsibility System under Board-Centric Governance. Science of Law Journal (2024) Vol. 3: 59-66. DOI: http://dx.doi.org/DOI: 10.23977/law.2024.030509.

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