Legal Status of the Independent Directors

Abstract

In the modern business environment characterized by processes of globalization, integration and transition, the independence of governing bodies becomes a key instrument for the implementation of reforms in the area of corporate law. The immense consequences which corporate scandals have caused influenced the adoption of the whole set of regulatory rules whose main goal is to improve the corporate governance framework, to set clear criteria for the selection of board members in companies and work on the independence of management entities themselves. For this purpose, one of the most important results of the reform of corporate governance becomes strengthening the independence of the board of directors, with controlled authorization over the work of executive directors. The author of the paper is focused on determining the legal status of independent directors in companies, as well as the analysis of the legal and economic institutes strengthening the position of independent directors, as well as the factors that in some cases may point to their ineffectiveness. Thought framework of the research includes the analysis of legal regulations in the legal system of the Republic of Serbia, as well as the most important European legal acts. The aim of the paper is to point to the existence of space and opportunities for creating new mechanisms for strengthening the position of independent directors, which helps prevent potential abuse by companies.