Are independent directors related parties?

Whether independent directors belong to related parties of the company is controversial in practice. According to different definitions, you can have different judgments:

1. From the regulatory point of view, independent directors are not related parties. Related parties are defined as investors, chairman, general manager and other senior managers, controlling shareholders, actual controllers, holding subsidiaries, etc. Independent directors are not included. They are independent managers of listed companies and need to perform their independent judgment obligations.

2. From the perspective of accounting standards, it can also be judged that independent directors are not affiliated parties. The definition of related party in accounting standards is basically the same, and independent directors are not listed as related parties. The accounting statements also require the company to make special disclosure on the transactions with related parties, but do not require the disclosure of transactions with independent directors.

3. But from the actual operation, there is a certain relationship between independent directors and the company. Because:

1) Independent directors enjoy the remuneration provided by the company;

2) Independent directors need to rely on the information provided by the company to make judgments;

3) Independent directors also need to safeguard the interests of the company to a certain extent, and it is difficult to be absolutely independent.

4) Although the nomination of company executives needs to be reviewed by independent directors, in practice, it is difficult for independent directors to completely resist the influence of management.

To sum up, from the perspective of regulatory and accounting standards, independent directors are not related parties of the company in principle. However, from a practical point of view, independent directors and companies also have great dependence, and there are still some constraints and challenges in real independence. This is also the reason why whether independent directors belong to related parties is controversial.

It can be said that this is a problem of combining theory with practice, which needs to be discussed and strengthened in all aspects of system design and implementation in order to truly play the role of independent directors as a corporate governance mechanism. It is necessary to clarify the independent status of independent directors and consider the subtle relationship with the company, which requires the joint efforts of regulatory authorities, company management and independent directors themselves.